Under accrual based accounting: Under accrual based accounting: Based on the matching principle, if cash has been spent on expenses, the revenue earned related to that expense must be recorded, regardless if cash has been received yet for the services. Revenue is recorded when cash is received and expenses are recorded when cash is spent Based on the matching principle, if cash has been received for services rendered, the expenses relating to that revenue must be recorded, regardless if cash has been spent Revenues are recorded when earned and expenses when they are incurred, regardless of whether cash has changed hands

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