Using Accrual Accounting System, Expenses And Revenues Are Recorded And Reported Only

 

Using Accrual Accounting, Revenues Are Recorded And Reported Only

Under Accrual Accounting System, we recorded and reported Expenses at the time when these are incurred or incurred to produce or earn Revenues for the business whether the cash is paid or not.

For example, the expenses of April incurred should be recorded and reported to Income Statement in April, eventhough, the payment is made in May.

Using Accrual Accounting, Revenues Are Recorded And Reported Only

Under Accrual System of Accounting, revenues or income are recorded and reported to financial statements at the time when these are earned or goods sold or services rendered to customers whether the cash is received or not.

For Example, the revenue earned in March is recorded and reported in this period eventhough the payment is received in advance in February i.e., before March as the goods sold or services rendered in March and not in February.