To apply for a deferral?

I can if you two get a deferral.

which would verify that we deserved a deferral.

let's do it on an accrual basis.

let's do the accrual accounting income statement.

To see the difference between cash accounting and accrual accounting

And what I'll do, I'll do the accrual accounting right here

But when you look at the Accrual basis it actually reflected what happened.

So, someone was saying that some Hailsham students in the past have managed to get a deferral.

So at least for month 1, the cash basis and the accrual basis of accounting

And I won't go too complicated into cash and accrual accounting and all that right now.

I realized that if I was ever going to apply for a deferral, then I'd have to show them something.

So let's se which of these two methods of accouting, the cash method and the accrual method

So in the accrual basis of accounting, you would say that you earned 400 of revenue in this month.

But if you look at the accrual basis it better reflects that you actually did some catering that month.

This is the cash basis of accounting and this is the accrual, and let's just look at the income statement

So hopefully this gives you a idea of why accrual gives a better picture of what's happening in a buisness.

In the next video, I'll try to reconcile what the Accrual income statement is telling us and the actual cash.

So I'm gonna start of, we're gonna focus on month 2 and what I've done is I've rewritten some of this accrual income statement down here so it really looks like a statement so this right here is the income statement for month 2 on an accrual basis.

So in month two I think it's fair that the Accrual method is giving us a better indication of what's actually going on.

And the whole idea with accrual accounting, is to match your revenues and expenses to when you actually perform the service, so it actual captures a business activity, as opposed to just capturing when cash changes hands.

Now there's one thing that you're probably confused by right now well you know, how do we reconcile everything with the cash we know that over this period we got 200 in income on an accrual basis.

So whether you do the cash basis or accrual basis you have the same exact amount of cash, what's more interesting is how the profit relates in each of the periods, and I'll talk about that in a little more depth in the next video.

In the last video, using the accrual basis for accounting we had 200 of income in month 2, but over that same month, we saw that we went from having 100 in cash, to having negative 100 in cash, so we actually lost 200 in cash.