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Cash vs accrual based accounting can affect your taxes A LOT In cash-based accounting system you write off inventory purchases when you buy them. In an accrual-based accounting system, you don’t write off the expense until you make the sale. Cash-based accounting makes the most sense if you are making less than seven figures and want to write off the inventory immediately. Accrual based accounting is best if you want to smooth our your cost of goods sold and get more reliable financial data. Eit
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