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What is Accrual Basis of accounting?
Accruals are any amounts that have not been accounted for, yet still owing at the period or year end. If the amount is unknown, estimates are necessary and then added to the expenses in order to show a more accurate representation in the income statement.
Accruals come in two forms1) When the benefits have been taken by the company, but no payments were paid as of yet.
2) Services which have been performed but payment was not received.
Practically all companies use the accrual basis of accounting. This is done in order to match expenses with the revenues they helped to earn in the appropriate period
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