Accruals Concept?

Pjdav

Hi, would someone please explain this to me in simple terms? its a bit confusing. Thank you!!

burg

if you year end is 31 December this should include all items relating to this year. That means invoices raised in that year but not paid till later and invoices received later that actually relate to that accounting period i.e. accountancy fee.

AlisonSwanson

The 'accruals concept' means that the financial statements should include all income and expenses incurred in the year whether or not they have actually been paid or received in cash. So you will need to adjust your financial statements for accrued and prepaid expenses, and accrued and prepaid income.

Bertie

Revenue and expenses are recognised within the period they are incurred, not when paid, nor not when payment is received.

My initial statement is untrue if the business, company, client etc are using cash based accounting.