accrual basis accounting


The most commonly used accounting method, which reports income when earned and expenses when incurred, as opposed to cash basis accounting, which reports income when received and expenses when paid. Under the accrual method, companies do have some discretion as to when income and expenses are recognized, but there are rules governing the recognition. In addition, companies are required to make prudent estimates against revenues that are recorded but may not be received, called a bad debt expense.

See also: List of Key Accounting Terms and Definitions at

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He taught me that their method of accounting was called accrual basis accounting and I learned everything about it and how it functioned.

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We chose not to pay taxes on the accrual basis accounting because the receivables were larger than our payables which made for more income.

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The accrual basis accounting base accounting method was used instead of a cash basis accounting method because of the timing of our receipt of payments.

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