This manuscript presents a data-processing technique which improves the accuracy and precision of absorption-spectroscopy measurements by isolating the molecular absorbance signal from errors in the baseline light intensity (Io) using cepstral analysis. Recently, cepstral analysis has been used with traditional absorption spectrometers to create a modified form of the time-domain molecular freeinduction decay (m-FID) signal which can be analyzed independently from Io. However, independent analysis of the molecular signature is not possible when the baseline intensity and molecular response do not separate well in the time domain, which is typical when using injection-current-tuned lasers (e.g., tunable diode and quantum cascade lasers) and other light sources with pronounced intensity tuning. In contrast, the method presented here is applicable to virtually all light sources since it determines gas properties by least-squares fitting a simulated m-FID signal (comprising an estimated Io and simulated absorbance spectrum) to the measured m-FID signal in the time domain. This method is insensitive to errors in the estimated Io which vary slowly with optical frequency and, therefore, decay rapidly in the time domain. The benefits provided by this method are demonstrated via scanned-wavelength direct-absorption-spectroscopy measurements acquired with a distributedfeedback (DFB) quantum-cascade laser (QCL). The wavelength of a DFB QCL was scanned across CO's P(0,20) and P(1,14) absorption transitions at 1 kHz to measure the gas temperature and concentration of CO. Measurements were acquired in a gas cell and in a laminar ethylene-air diffusion flame at 1 atm. The measured spectra were processed using the new m-FID-based method and two traditional methods which rely on inferring (instead of rejecting) the baseline error within the spectral-fitting routine. The m-FID-based method demonstrated superior accuracy in all cases and a measurement precision that was ≈1.5 to 10 times smaller than that provided using traditional methods.