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Accrual VS Cash

  • Writer: Lincoln Chronister
    Lincoln Chronister
  • Jan 14
  • 1 min read

Updated: Feb 16

The cash method is very simple and easy to understand. Sales are recorded when money is gained. Expenses are recorded when you spend money. The problem with the cash method, however, is that it doesn’t always reflect the economic reality of a situation. The cash method only recognizes when money changes hands.


With the accrual method of accounting, revenue is recorded as soon as services are provided or goods are delivered, regardless of when cash is received. It's a good idea to learn the accrual method because it's the only method for the GAAP-Generally Accepted Accounting Principles.

 
 
 

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3 Comments


Lincoln
Jan 15

What is the difference between an LLC and a corporation?

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Dalton
Jan 30
Replying to

An LLC is owned by one or more members while a corporation is owned by shareholders.

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