What are the Challenges of Accrual Basis Accounting?
While accrual basis accounting offers numerous benefits, it also presents some challenges:
Complexity: More complex than cash basis accounting, requiring a deeper understanding of accounting principles and possibly professional assistance. Time-Consuming: Can be time-consuming to maintain, especially for small businesses with limited resources. Potential Cash Flow Issues: Since revenue and expenses are recorded when earned or incurred, it may not accurately reflect the company's cash position, leading to potential cash flow management challenges.