What is accrual concept ?

Question

Accepted Answer

Accrual concept is a method of accounting where revenues and expenses are recognized when earned or incurred, regardless of when payment is received or made.

Accrual accounting recognizes revenue when it is earned, not when payment is received
Expenses are recognized when they are incurred, not when payment is made
This method provides a more accurate picture of a company's financial health
Example: A company provides services in December but doesn't receive payment until January. Under accrual accounting, the revenue is recognized in December when the services were provided.
Example: A company incurs expenses in December but doesn't pay until January. Under accrual accounting, the expenses are recognized in December when they were incurred.

Accepted Answer

Accrual concept recognizes revenues and expenses when earned or incurred.
Regardless of cash flow, matching costs with revenues in the same period.
Provides accurate financial performance picture, complying with GAAP/IFRS.
Differing from cash basis accounting, accrual reflects economic reality.

What is accrual concept ?

Top WNS Associate Lead interview questions & answers

Popular interview questions of Associate Lead

Top HR questions asked in WNS Associate Lead