Some common accounting methods used in financial reporting include accrual accounting, cash basis accounting, and tax accounting. Accrual accounting recognizes revenue and expenses when they are incurred, not when cash is exchanged. Cash basis accounting recognizes revenue and expenses only when cash is received or paid. Tax accounting follows the rules of the IRS to determine the timing of income and deductions.
Financial statements do not always tell the entire story about a company. Accounting methods and fi...
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