Asked by Olivia Yslas on Jul 16, 2024
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Even though GAAP requires the accrual basis of accounting, some businesses prefer using the cash basis of accounting.
GAAP
Generally Accepted Accounting Principles; the common set of accounting standards and procedures used in the U.S.
Accrual Basis
The accrual basis of accounting records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged.
Cash Basis
An accounting method where revenues are recognized when cash is received, and expenses are recorded when cash is paid.
- Identify the differences between accrual and cash accounting methods.
Verified Answer
Learning Objectives
- Identify the differences between accrual and cash accounting methods.
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