Cash basis vs Accrual basis

Cash basis

Advantages

1. It is very simple as adjustment enteries are not required.
2. This basis of accounting is suitable for those enterprises where most of the transactions are on cash basis.

Disadvantages

1. It does not give a true and fair view of the profit or loss abd the financial position of an enterprise.
2. It does not follow the matching principle of accounting.

Accrual basis

Advantages

1. It shows a complete picture of financial transactions of the business.
2. It discloses correct profit or loss and also exhibits true financial position of an enterprise.

Disadvantages

1. It is not as simple as cash basis.
2. A quick appraisal of the profit/loss is not possible.