4 Important Differences between Cash and Mercantile Methods are listed below:
Cash Method:
1. Entries are recorded only when cash is received or paid.
2. Receipt of revenue (income) is considered as ‘income’ when cash is received against it.
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3. A payment is considered as expenditure, when it is actually paid to others.
4. Generally, the professionals adopt this system.
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Mercantile Method:
1. Entries are recorded even a payment or receipt is due.
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2. Receipt of revenue (income) is considered as ‘income’ when it accrues to the person.
3. A payment, which is payable (due) to the other party, may also be considered as paid (deemed expenditure), even though such amount is not actually paid. However such due must be definite, real and legal.
4. This method is generally adopted by business people, trade communities.