How does the cash basis accounting statement benefit a company?

Answer 1

Cash basis accounting is a very simple form of accounting. When a payment is received for the sale of goods or services, a deposit is made, and the revenue is recorded as of the date of the receipt of funds – no matter when the sale was made. Checks are written when funds are available to pay bills, and the expense is recorded as of the check date – regardless of when the expense was incurred.

The primary focus is on the amount of cash in the bank, and the secondary focus is on making sure all bills are paid. Little effort is made to match revenues to the time period in which are earned, or to match expenses to the time period in which they are incurred.

The primary advantage of the cash basis is that it is quick and easy. For a business that does not sell on credit, and pays bills as they are incurred, it may be all that is necessary. The cash basis records only cash transactions, making the cash account a crude measure of how well the business is performing.

The 2 links give a pretty good summary of cash vs accruals accounting.