Relatively early in a law firm's existence, a decision is required concerning whether to report financial activities to the Internal Revenue Service on a "cash" or "accrual" accounting basis.

Cash basis accounting records when cash actually changes hands in a transaction, providing a real-time view of your financial position that reflects the actual cash flow of a business or individual.

Accrual accounting is one of the primary accounting methods and is based on the matching principle, which dictates that revenues and their associated expenses be recorded in the same accounting period ...