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Accrual-Basis Accounting
Accounting basis in which companies record transactions that change a company's financial statements in the periods in which the events occur.
Cash-Basis Accounting
Accounting basis in which companies record revenue when they receive cash and an expense when they pay out cash.
Revenue Recognition Principle
An accounting principle stating that revenue should be recorded when it is earned and realizable, regardless of when the cash is received.
Expense Recognition Principle
An accounting principle that states expenses should be recognized and recorded when they are incurred, regardless of the timing of cash payments.
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