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The transactions of a business should be kept separate from the transactions of the owner/s, and vice versa. For example, Mr. C purchased a personal house. That transaction should not be recorded as a transaction of his mini-mart. In the same case, the rent of the mini-mart space ...
In essence, income is matched with expenses and vice versa. Through the accrual basis of accounting, better matching of income and expenses is achieved. Revenue Recognition Principle –In accrual basis accounting, revenue or income is recognized when earned regardless of when received. It means ...