The accrual basis of accounting requires adjustments to recognize revenues in the periods they are earned and to match expenses with revenues.

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The accrual basis of accounting recognizes revenues in the periods they are earned, even if payment is not received, and matches expenses with revenues, even if payment is not made. Adjustments are made at the end of the accounting period to ensure that revenues and expenses are properly recognized.

The Accrual Basis of Accounting Requires Adjustments to Recognize Revenues