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Accrual Method of Accounting

Accrual Method of Accounting

Definition

A method of accounting under which all expenses or gains are recognized at the time the right to collect or obligation to pay exists. Under this method, a taxpayer who reasonably doubts that a debt will be paid may decline to accrue the debt in the year payment is due. However, the taxpayer must include the debt payment in the year he becomes certain to recover the debt.

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