GAAP was never intended to manage only cash. It is a system for understanding all the elements of your business. It has three key reports: the income statement, the cash flow statement, and the balance sheet. There is no question that you need to understand these reports (or work with an accountant and bookkeeper who do), because they will give you a holistic view of your company; they are powerful and highly useful tools. But the essence of GAAP (Sales − Expenses = Profit) is horribly flawed. It is a formula that builds monsters. It is the Frankenstein formula. To successfully run a
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