Govt to gradually shift to accrual system of accounting: CGA

“There are definite benefits of accrual accounting that cannot be ignored. The decision makers can know the full cost of services they are providing, and this would result in better resource allocation, better management of assets and liabilities,” said CGA V N Kaila.

Cash-based accounting is a method of bookkeeping that records financial events based on cash flows and cash position. Revenue is shown in the books when cash is received and expense is recognised when cash is paid. Under accrual accounting, revenue is shown in the balance sheet when it is earned and realised, regardless of when actual payment is received.