chap 2-JC1 cash vs acc - AC 303 Judgment Case 2-1 Accrual accounting measures the performance and position of a company by recognizing economic events

chap 2-JC1 cash vs acc - AC 303 Judgment Case 2-1 Accrual...

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January 30, 2008 AC 303 Judgment Case 2-1 Accrual accounting measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The matching principle is applied, and revenues are matched to their expenses at the time in which the transaction occurred, instead of when payment is made or received. This method gives a more accurate picture of the company’s current financial condition because it combines the current cash inflows/outflows with future expected cash inflows/outflows.

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