What Are the Accrual Bases That Accounting Recognizes?

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Accounting recognizes some very specific accrual bases that you're going to want to familiarize yourself with. Find out about the accrual bases of accounting that are commonly recognized with help from a banking and financial expert in this free video clip.

Part of the Video Series: Accounting FAQs
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Video Transcript

Hi, I'm Lori Greer from Atlanta, Georgia, and I'm here to discuss what is the accrue basis of accounting? The accrue method is probably the most common method used in the world of accounting today. The accrue basis of accounting is recorded when income is earned and when expenses are incurred. As opposed to the cash basis of accounting, which is recording cash when it's received. With a company using the accrued method they'll have the leeway to record when income and expenses are recognized. That being said there are rules that govern the recognition. Also the company is required to make prudent estimates against revenues that are recorded, but not received.This is better known as bad debt expense. I'm Lori Greer from Atlanta, Georgia, and we just discussed what is the accrue basis of accounting.


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