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Records income when it is earned and expenses when they incur, regardless of when the cash is actually received or paid. Often used by larger companies.

A method to assign costs to inventory that allows for the actual cost of an item to be used on a case-by-case basis. Useful for unique or high-priced items.

A method where income is reported on long-term contracts as the work is completed, not when the project is fully complete. Ensures income matches the work done.

A method where all income and expenses from a contract are recorded only when the contract is completed. Useful to defer taxes in certain situations.

Revenue is recognized when payments are actually collected rather than at the point of sale. Beneficial for sales where payments are received over a period.

An inventory accounting method where the first items placed in inventory are the first to be expensed. Can lead to higher tax bills in times of inflation.

An inventory valuation method where the last items placed in inventory are the first to be expensed. Less common after changes in tax regulations.

Principles that determine the specific conditions under which income becomes recognized as revenue. Key for compliance with GAAP and IFRS.

A method where income is reported when cash is received, and expenses when they are paid. Commonly used by individuals and smaller businesses.