Using the same business you wanted to open in the Module One discussion, consider the impacts of the basis of accounting by answering the following questions: What is the cash basis of accounting? What is the accrual basis of accounting? How will the accounting for your specific business be different if you use the accrual basis (please use specific examples) instead of the cash basis? What will accrual basis statements tell you specifically that cash basis statements will not tell you? The cash basis accounting records exchanges with cash: cash receipts and cash payments. At the point when money is received, revenues are recorded. At the point when money is paid, expenses are recorded. Thus, revenues are only recorded when money is received and costs are only recorded when money is paid. The cash basis accounting is not permitted under Generally Accepted Accounting Principles (GAAP); but, little organizations will at some point utilize this strategy because it is easier, since it requires less knowledge of accounting concepts and principles. Also, this method does a good job at tracking a business' cash flow (Miller; Mattison; Matsumura, 2014). The Accrual basis accounting records the effect of each transaction as it occurs. Revenues are recorded when earned and expenses are recorded when incurred. Most businesses use the accrual basis. This method provides a better picture of a business revenues and expenses; it records revenues only when they are earned and expenses only when they have been incurred. Under this method it doesn't matter when cash is received or paid (Miller; Mattison; Matsumura, 2014). For my business I chose an auto insurance agency: if I was to use the cash basis accounting I would record revues at the end of the month when the protection and billing cycle end and cash come in; if I was to use the accrual method I would record revenues at the moment I write/sell