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| Accrual Basis of Accounting |
- Transaction are recognised as soon as they occur, whether or not cash is actually received or paid.
- Accrual basis ensures better matching between revenue and cost of the enterprise during an accounting period.
- Accrual means recognition of revenue and cost as they are earned or incurred and not as money is received or paid.
- Revenues may not be realised in cash.
Cash may be received simultaneously or before/after revenue is created.
Expense may not be paid in cash.
Cash may be paid simultaneously or before/after expense is made. |
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