How are some companies are able to go into the negative so quickly even though on the books they appeared to be making decent profits? The accrual basis shows the revenue even though no transfer of currency has actually taken place on that date. So what would happen if the client is unable to pay the debt or worse refuses to pay the debt because the services weren't rendered properly. Does the company that has already marked the transaction in the journal and ledger as completed because the IOU was assumed to be paid at a later date go back and mark it as a debt? Do you think this happens enough to have a process ready in this situation?
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