How does accrual accounting record business transactions?
Accrual accounting requires revenue to be recognized in the year that it is earned and expenses in the year that they are paid out, but not necessarily in the same year. For instance, customer invoices that aren't paid may be listed as accounts receivable. Accrual and Cash Accounting are both distinct but a significant difference is that accrual accounting gives you a bigger picture of what is going on with your finances.
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