Glossary
Accrual accounting
Accrual accounting records revenue when it is earned and expenses when they are incurred, regardless of when cash moves. Because it matches income to the costs that produced it, accrual accounting shows what a period actually earned rather than what happened to land in the bank. Canadian corporations generally must file on this basis. It is why a profitable month can still leave a business short of cash, which is the gap a cash-flow forecast is meant to close.
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