The Daily Technical #46: Is it better to finance a deal via debt or stock?

Good morning. Welcome to the 46th edition of The Daily Technical. You’re here for one reason so let’s dive in.

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OVERVIEW OF YESTERDAY’S QUESTION
How does accrual accounting differ from cash-basis accounting?

Accrual Accounting: For accrual accounting, revenue recognition is based on when it's earned and the expenses associated with that revenue are incurred in the same period.

Cash-Basis Accounting: Under cash-basis accounting, revenues and expenses are recognized once cash is received or spent, regardless of whether the product or service was delivered to the customer.

Common Mistakes

1. Mixing Up Timelines: One common error is confusing the timing of recognition for revenue and expenses between accrual and cash-basis methods. Accrual accounting is about when the transaction occurs, while cash-basis is about when the cash moves.

Key Takeaways / TLDR

• Accrual Accounting: Revenue and expenses are recorded when they occur, not when cash is exchanged.

• Cash-Basis Accounting: Transactions are recorded only when cash enters or leaves the business.

TODAY’S QUESTION
Is it better to finance a deal via debt or stock?

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THAT’S A WRAP
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The HirePrep Team