accrual basis
- An accounting approach where revenues and expenses are documented during the period in which they occur, irrespective of when the related cash transactions take place. This method is also known as the accrual method
- The company chose to use the accrual basis of accounting to better reflect the financial state of their business over time.
- Unlike cash basis accounting, the accrual basis records income and expenses when they are earned and incurred, not when they are paid.
- An accurate portrayal of a business's financial health may be better shown through the accrual basis rather than only tracking cash transactions.
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