Judul : Accrual Accounting Concept
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Accrual Accounting Concept
Financial statements prepared with the concept of accrual accounting which requires that income and expenses must be recognized in the accounting period where they occur not when cash is received or paid. The exception to this general rule is a cash flow statement whose main purpose is to show the effect of the transaction flows during the accounting period.
Under the basis of accrual accounting, income must be recorded in the accounting period in which it was obtained. Therefore, the income earned must be recognized in the current accounting period and not in the next period in which it will be received. In contrast, prepaid income is not displayed as income in the accounting period in which it was received but rather it must be shown as in the subsequent accounting period where the service or liability for income received in advance has been carried out.
Costs, on the other hand, must be recorded in the accounting period in which they were issued. Therefore, accrued costs must be recognized in the accounting period that runs not in the next period in which it will be paid. In contrast, prepaid expenses are not shown as costs in the accounting period he paid but instead he must be presented as such in the subsequent accounting period where services related to prepaid expenses are made.
The accrual basis of accounting ensures that expenditure is "matched" with income earned in an accounting period. This Accrual concept is therefore very similar to the principle of "macthing cost againts revenue"
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