Although most businesses use cash or accrual accounting, companies with inventory may use a hybrid method.It is a GAAP-certified method of accounting.Complex accounting system as it records finances that are yet to be paid and received.Predict the business’ long-term profitability more accurately but may lack short-term predictability. Records the account payables and receivables rather than the cash flow of the company.It is not a GAAP-certified method of accounting.Therefore, it can mislead investors into believing that the company is in profit. It can, however, lead to misinterpretation as it does not record payables and receivables.It is the simplest to implement and is widely used by sole proprietorships and small businesses.In this method, the company records any transactions related to cash, property, or services in the year of actual or implied receipt.
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