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Accrual Basis |
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Accrual basis In the context of accounting, practice in which expenses and income are accounted for as they are earned or incurred, whether or not they have been received or paid. Antithesis of cash basis accounting. Accrual Accounting A system of accounting that recognizes revenue and matches it with the expenses that generated that revenue. Unlike other systems of accounting, which recognize revenue and expenses in the order in which they are received, the accrual accounting convention ignores the function of time and only considers what expenses generate what revenues, even if payments have not actually been made. Companies with inventories are required to use the accrual method for tax purposes. Want to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit the webmaster's page for free fun content. |
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One startup decision that seems to cause entrepreneurs unnecessary consternation is selecting the right accounting method -- cash basis or accrual basis The primary purpose of the accounting method you choose is to calculate your business''s taxable income for federal (and state) income tax purposes One startup decision that seems to cause entrepreneurs unnecessary consternation is selecting the right accounting method -- cash basis or accrual basis. Categories: Income Security, Accrual basis accounting, Data collection, Employee benefit plans, Employee retirement plans, Employees, Financial analysis, Financial management, Investment planning, Investments, Pension plan cost control, Pensions, Program evaluation, Retirement, Retirement benefits, Retirement income, Risk assessment, Risk management, Statistical data, Strategic planning, Surveys, PBGC Single Employer Pension Insurance Program Revenue on the accrual basis is recognized when earned, while under the cash basis it is recognized when collected. |
Accrual Basis |
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