Do u use cash accounting or accrual? Why?
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It matches the revenue with expenses when the revenue was earned and the expenses occurred. It is more complex than cash accounting but provides a much better summary of what is going on in the company.
I disagree. You can have massive cash flows but revenue's low due to annual billing for recurring products.
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But with accrual that annual revenue will be split up into monthly portions to help match the cash flow and show a more consistent burn rather than huge burn for 11 months and 1 month where you see a spike in revenue.
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