The accrual basis is an accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur.
An in-depth look at the accrual basis of accounting, its historical context, key principles, importance, applicability, and related terms.
The Statement of Cash Flows and the Income Statement are essential financial documents that offer unique insights into a company's performance. This article distinguishes between the two by emphasizing their individual purposes, methodologies, and the differences between cash transactions and accrual accounting.
A detailed understanding of the accrual basis (accrual method) accounting, including its principles, applications, advantages, disadvantages, and a comparison with the cash basis accounting method.
The Reserve Method (Bad Debts) involves the accrual of bad-debt expense based on the projected worthlessness of receivables or prior experience with uncollectible receivables.
The Specific Charge-Off Method for bad debts involves deducting a bad debt when a specific receivable becomes worthless, after exhausting all collection efforts. Accrual basis taxpayers must use this method for tax purposes.
