The cost method of accounting differs from the accrual method in that expenses are recorded when they are incurred in the cost method and when they are paid in the accrual method.

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In the cost method, expenses are recorded when they are incurred, similar to the accrual method. The difference is that the accrual method also records revenues when earned, not when cash is received, unlike the cash method, which records expenses when they are paid.

The Cost Method of Accounting Differs from the Accrual Method