Final answer:
GAAP dictates that large companies use the accrual method for recording accounts receivable.
Step-by-step explanation:
Generally Accepted Accounting Principles (GAAP) dictate that large companies use the accrual method for recording accounts receivable.
The accrual method records revenue when it is earned and expenses when they are incurred, regardless of when cash is received or paid. This means that when a company makes a sale and invoices the customer, the revenue is recorded immediately, even if the customer has not yet paid.
Using the accrual method ensures that financial statements accurately reflect the financial position and performance of a company.