What is the basic idea underlying the preparation of consolidated financial statements? Discuss the implications of accounting concepts and conventions on financial statements. Explain basic accrual accounting concepts, including the matching concept. What are some of the best ...
Definition: The accrual concept is one of three basic accounting concept, others are going concern and consistency. As per this concept, the recognition of the transactions and events as and when they arise, i.e. on mercantile basis, rather than on cash basis in which the transaction is reco...
Accrual Concept Financial statements are prepared under the Accruals Concept of accounting which requires that income and expense must be recognized in the accounting periods to which they relate rather than on cash basis. An exception to this general rule is the cash flow statement whose main purpo...
The general concept ofaccrual accountingis that accounting journal entries are made when a good or service is provided rather than when payment is made or received. Entries are also made for debts and payments due. This method allows the current and futurecash inflows or outflowsto be combined...
What is the difference between the retained earnings number of the income statement and the balance sheet? What are the differences between cash and accrual basis accounting? What is the difference between the average cost of funds and the marginal cost of funds? What is the...
and expenses should be recognised in the financial statements that correspond to when they are earned regardless of when payment is received. In other words, accrual accounting focuses on the timing of the work that a business does to earn revenue rather than focusing on the timing of the ...
Accrued expense is a concept in accrual accounting that refers to expenses that are recognized when incurred but not yet paid.
Q: What is the Accrual concept of Accounting? Ans: In the accrual concept of accounting, the transactions get recorded as and when they occur. This is unlike the cash basis of accounting, where the transactions get recorded when the consideration is received. Under both methods, the principle...
Accrued interestis a fundamental concept in accrual accounting and finance, ensuring that interest expenses and revenues are recorded in the period they are incurred, regardless of payment. This approach aligns with thematching principle, providing a more accurate representation of financial performance an...
It reduces the Accrued Revenue liability on the balance sheet and increases the company’s cash balance. In summary, the initial accrual entry records the revenue that has been earned but not yet received, while the cash receipt entry records the cash when it is received. These entries ensure...