[trəˈdɪʃənl əˈkaʊntɪŋ]
Traditional Accounting is a type of accounting where revenue and expenses are recorded when the transaction occurs rather than when invoices are paid.
Traditional Accounting, also known as accural accounting, is a method of accounting where every invoice that is received and sent is recorded, regardless of the invoice's paid status.
This method then calculates Profits using these invoices. This is different to Cash Basis accounting where profit is calculated using transactions where the cash has already changed hands.
Traditional Accounting provides a more accurate picture of the company's financial situation than Cash Basis but it is often much more complicated to managed for Sole Traders and small businesses.
A Self-employed individual can use Cash Basis accounting if they have a turnover less than £150,000. Otherwise, they must use Traditional Accounting methods.
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