# Accounting - In [[accounting]], numbers in parenthesis and/or in red are negative. ## Two Types - Cas[[2d-minimal]]h Accounting - Cash received for sale is revenue - Cash spent are expenses - Cash left is profit - Used only by very small businesses, where all transaction are in cash - Accrual Accounting - Matching Principle - Match the cost with its associated revenue to determine the profits in a given period of time. - Goal is to properly represent state of business - Need to Estimate or accrue revenue and/or expenses to implement the Matching Principle - Required to meet Matching Principle and GAAP - Business runs on credit - Business spends cash in short term to support future sales