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Unformatted text preview: income took place. You would reduce your 2002 income by $50 to reflect the lower payment you actually received. This is just one of many examples in which the accrual method of accounting is used in the everyday process of the business world. The accrual method gives you a very accurate picture of your financial situation. The reason that the accrual method is so accurate is because you record income on the books when it is truly earned, and you record expenses when they are incurred. Income earned in one period is accurately matched against the expenses that correspond to that period, so you get a better picture of your net profits for each period. Reference below Gerald P Weinstein, William J Cenker. (2008, August). Tax Accounting Method and Entity Choice. Taxes, 86(8), 23-30+. Retrieved March 8, 2009, from Accounting & Tax Periodicals database. (Document ID: 1521830841)....
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- Spring '09