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Let suppose if Salary is transferred on the same month, then it required or not ?
When Salaries are paid in the same month, no accrual entry will be made.
When salaries of one month are paid in next month, Accrual is recorded.
Recording accrual helps budgeting & planning. Salary of January paid in February and recorded in February mean it relates to February. Actually this will be expense of January.
if all salaries transferred in the same month you do not need to make an accrual for salary.
Accrual helps in budgeting & planning.
With accrual system of accounting an expense is recognised when incured and not necessarily when cash is paid. Cash salary may be paid the in the month following the month in which it was incured.
