In accounting for compensated absences, a company following generally accepted accounting principles would account for the liability using the

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Under generally accepted accounting principles (GAAP), companies are required to account for compensated absences, such as vacation, sick leave, and other paid time off, using the accrual basis of accounting. This means recognizing the expense and related liability in the period in which the employee earns the benefits, rather than when they are paid or used.

In Accounting for Compensated Absences, a Company Following Generally Accepted