WHAT IS ACCRUAL ACCOUNTING?
BUSINESS
GLOSSARY
2022 SERIES
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When we record a transaction as it happens even if the payment has not been received or paid.
Accrual-based accounting.
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A transaction that has been done and recorded but not yet invoiced.
In other words
Accrual-based accounting.
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Businesses who exchanges services or products on credit.
Uses of accrual accounting.
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Uses of accrual accounting.
In such scenario books of account is updated either as booked revenue or expense paid without any exchange of cash.
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Types of accrual accounts.
Accounts Receivable
Accounts Payable
Accrued Revenue
Accrued Liabilities
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Accrual accounts.
Common in big business as it tends to provide even recognition of revenue & expenses.
Less practiced in small businesses as they highly depend on cash inflow
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Cash Vs Accrual
Cash: Recognize revenue/expense when cash is received/paid
Accrual: Recognize revenue/expense when it is earned/incurred.
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