Correct accounting methods are crucial for businesses to accurately report revenue and expenses. Generally, there are two main accounting methods: cash and accrual accounting. The appropriate accounting method depends on your business’s size and legal structure.
Small businesses typically use the cash method since it is simpler and doesn’t require tracking accounts receivable or payable. The accrual method is more appropriate for businesses that need an accurate balance sheet, want to track retained earnings, or better manage expenses.
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