Method of account

Question

Method of account

Accepted Answer

The method of account refers to the system or approach used to record and organize financial transactions.

There are several methods of accounting, including cash basis accounting and accrual basis accounting.
Cash basis accounting records transactions when cash is received or paid, while accrual basis accounting records transactions when they occur, regardless of when cash is exchanged.
Other methods include hybrid accounting, which combines elements of both cash and accrual basis accounting, and specific industry-based accounting methods.
For example, the construction industry often uses the percentage of completion method to account for long-term projects.
The choice of accounting method depends on factors such as the size and nature of the business, legal requirements, and financial reporting needs.

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