Glossary
Accrual basis accounting
Accrual basis accounting records revenue when it is earned and expenses when they are incurred, regardless of when cash actually changes hands. By matching income to the costs that produced it, it gives a truer picture of performance than tracking the bank balance alone — and it is the method required under Canadian accounting standards for most incorporated businesses. It is the basis underpinning reliable bookkeeping and tax filing, and it differs from the simpler cash basis used by some small sole proprietors.
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