Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

What is the Accrual Concept of Accounting?

user-image
Question added by Siraj vannathamkandy , Senior Accountant , Gulf Business Center
Date Posted: 2014/03/18
syed waseem Iqbal
by syed waseem Iqbal , Senior Accountant , Pacific Exim (pvt) ltd

Income and Expense must be recognized in the period to which they relate instead of in the period in which cash received

 

Income ,Expenditure  should be  related to the period

ALLAH DITTA
by ALLAH DITTA , Accountant , Master Beverages & Food Limited

income and expense which r related to the peroid records in that period not when actually recieved or paid.

Ameensha Abdul
by Ameensha Abdul , Credit Manager , Gulf Marketing Group

Transactions are recorded when they occur & not when the related payments are received or made, in other words before we have the original transation we are having some reference in ledger.

Mohammad Shamsuzzaman Shamo
by Mohammad Shamsuzzaman Shamo , Senior Manager , BRAC

Income and Expenditure which are not occurred within period but all are considered for preparing Accounts. 

Muhammad Faheem
by Muhammad Faheem , Consultant- Accounts, Audit & Taxation , Basim Associates

Income should be recorded when accrued/receivable and liability should be recorded when incurred/outstanding.

Dheeraj Nair
by Dheeraj Nair , Financial Accountant , Al-Jazeera Children's Channel [JCC] – Qatar Foundation

Theoretically speaking Accruals are items in which a firm realizes its income or expense with happening of an actual transaction. For Example, your salary payable is due on31st Dec and you didn’t pay that on that month. So even though you didn’t pay your staff in the month of Dec (Means the actual transaction is not happening), you have to realize it as expense in your books. So you will debit the Salary Expense in the Month end (31st Dec) by crediting the accrued salary. So that whenever you pay the salary (Actual transaction happens), you may debit the accrued salary & Credit bank.

By doing this, the expense will be booked in the correct period.  Practically speaking, whatever goods or service you received for which you didn’t receive the corresponding invoices are accruals (Accrued Expenses). Hope this explanation helped.

 

Dheeraj Nair

 

Rajesh Perumbadari
by Rajesh Perumbadari , Joint Venture Audit Accountant , Kuwait Foreign Petroleum Exploration Company

Record on due basis and not on received/paid basis.. in simple terms

Ilham Mohammed
by Ilham Mohammed , Senior Accountant , gulf center for foodstuff

Accrual Concept mean what ever the transection belongs to perticular one period (income statement period) to be account for the same period wether there is cash flow  or not.

More Questions Like This

Do you need help in adding the right keywords to your CV? Let our CV writing experts help you.