What types of transactions are recorded under accrual bookkeeping?

Regardless of the date of the cash exchange, accrual bookkeeping records transactions as they happen. Instead of recording income and expenses at the time of payment, this method records them as they are generated or incurred. Sales made on credit, delivered services that have not yet been paid for, accrued but unpaid earnings, and expenses spent but not yet settled are examples of the types of transactions that are documented under accrual bookkeeping. By giving a complete picture of a company’s current liabilities and earnings, accrual accounting provides a more realistic picture of that company’s financial health. With this strategy, long-term financial commitments are better understood, and strategic planning is made easier.

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