The introduction to the chapter emphasizes that there are several reasons to keep accurate financial records, including the legal requirement of filing taxes, the needs of the administrators, and the ways in which it helps keep the business on track. Too methods of accounting are discusses: accrual vs. cash basis. An accrual system counts income and expense when the money is committed. A cash system records income and expense when the money come in or is spent. Both systems will add up to the same totals in the end, but the methods are difference. Small businesses are advised to use a cash basis system because it is simply easier to keep track of. Accrual systems are the standard for larger businesses. The chapter goes on to list what documents are necessary to keep and which can be discarded and how to use these documents in keeping financial records. The basic...
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