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Accrual Basis of Accounting
The term accrual accounting (sometimes referred to as the accrual basis of accounting) refers or relates to a method of account in which income is recorded when it is earned and expenses are recorded when they are incurred, irrespective of whether the cash is received or is disbursed in the accounting period under review.
Under the accrual method, companies have a certain amount of discretion about when income and expenses are recognized, but there are rules governing the when revenue and expenses are recognized.
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