What is Hybrid Basis of Accounting? Meaning, Features and More.

हिन्दी में पढ़ें:

Before understanding the hybrid basis of accounting, we need to understand the accrual basis and cash basis of accounting because it is a mixture of both.

Accrual Basis of Accounting: It is a base or method of accounting that states that transactions are to be recorded in the books when the transaction occurs. It records both cash and credit transactions as its principle is based on both cash and credit, and it is the most commonly used basis for accounting.

Cash Basis of Accounting: It is a basis or method of accounting that states that transactions should be recorded in the books only when cash is received or paid. It does not record credit transactions as it is based on cash only and if one wants to record credit transactions then one must first receive or pay the payment for that transaction.

If we talk about the difference between an accrual basis and cash basis, on an accrual basis both cash and credit transactions are recorded and recorded at the time when the transaction occurs, and on a cash basis only cash transactions are recorded and recorded when cash is received or paid.

What is Hybrid Basis of Accounting?

A hybrid basis of accounting is a base for accounting work that tells when to record the transactions in the books and it is a mixture of accrual basis and cash basis, hence it is also called a mixed basis of accounting. According to this, both accrual basis and cash basis can be used for accounting work and this basis is used less than the other two bases.

Generally whoever uses this basis records the income on a cash basis and expenses on an accrual basis in the books and there can be many reasons for doing so like showing less profit, not being sure whether the income will be received or not, etc. Mostly this basis is used in those fields where it is not certain whether the income will be received or not like Advocacy, etc. but this may not be the case.

Note: Whether this basis can be used or not may depend on the organization, nature of the organization, governing authority, etc.

Features of the Hybrid Basis of Accounting

Following are the features of hybrid basis of accounting:

1. Base:

It is a base for accounting work just like accrual basis and cash basis. According to this both accrual basis and cash basis can be used to record transactions in the books and anyone who wants to do accounting work through this basis has to select it before starting the accounting work.

2. Mixture:

Hybrid basis is a mixture of accrual basis and cash basis hence it has the features of both and whoever does accounting work according to it can use both accrual basis and cash basis.

3. Describe:

It tells when to record a transaction. If an accrual basis is used to record a transaction, then the transaction has to be recorded at the time when the transaction occurs and if a cash basis is used then the transaction has to be recorded when cash is received or paid.

4. Less Recognized:

This basis is less recognized than the accrual basis because in this the proper accounting rules like double entry system, concepts, principles, etc. are not followed properly and the transactions can be recorded in the books on any basis.

5. Options:

This basis provides options for recording the transactions as it is a mix of accrual basis and cash basis and in this, the transactions can be recorded in the books through any of the basis like by using accrual basis or by using cash basis or by using both the bases.

Read Also:

• What is Basis of Accounting? Meaning, Features and More.
• Classification of Basis of Accounting
• What is the Accrual Basis of Accounting? Meaning, Features, and more.
• What is the Cash Basis of Accounting? Meaning, Features, and More.

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