Accrual Accounting Concept

Accounting Concept : Accrual Concept
Under Accrual Concept, transactions are recorded only when earned or incurred rather than collected or paid.Example : A seller bills the buyer at the time of sale and treat the bill amount as revenue, even through the payment may be received later.

Few Points to Remember
  • A revenue is recorded when sales are made or services are rendered, whether the cash is received or not
  • Expenses are recorded in the accounting period in which they assist in earning the revenue whether the cash is paid for them or not.

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