Accrual Accounting - if income is not recognised how do we trust income statement?



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if the company is not received the money for the product which they sold, then the ratio and analysis we do in income statement will be reliable.

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As long as all companies follow the same accounting policy then it is fine to compare their financials using financial ratios.

Anyway accrual accounting is the most accurate representation of the operations of the company. Revenue is accounted only for services provided.

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