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The Precision of Accrual Accounting in Financial Reporting

December 12, 2023

Why is accrual accounting considered more accurate than cash accounting?

Accrual accounting offers a more precise view of a company's financial position by recording revenues and expenses when they're earned or incurred, rather than when cash changes hands. This method aligns financial activities with the periods they relate to, providing a clearer depiction of a business's profitability and financial health.

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