Define Accruals.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Define Accruals.

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Meaning of Accruals

Accruals for expenses means expenses incurred but payments are not made yet. Accruals fro incomes  means revenues earned but payments are not received yet. Accruals impact net income in Income Statement. It also impact Balance sheet as accruals involve non cash assets and non cash liabilities.

Accrual accounting is most common used accounting method in which performance of a business organisation is measured by recognising economic events regardless of when cash transactions are occurred. Main purpose of accrual accounting is to match revenues of a particular accounting period with expenses of a particular accounting period.

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