Revenues and expenses often are recognized in income statement accounts even though no cash has been received or paid. This is primarily a result of applying the:

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The accrual basis of accounting requires recognition of revenues when earned and expenses when incurred, regardless of whether cash has been received or paid. This basis provides a more accurate representation of a company's financial position and performance than the cash basis, which only recognizes transactions when cash changes hands. Therefore, revenues and expenses are recognized in income statement accounts even though no cash has been received or paid due to the accrual basis of accounting.

Revenues and Expenses Often Are Recognized in Income Statement Accounts