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If accruals are not used, only cash transactions are recorded. Credit transactions and future liabilities as well as cash expected to be received for revenues earned are ignored. Revenues are recognized to have been earned when goods are delivered or services provided. Expenses are reported when they are incurred under the accrual basis accounting and not when cash is paid for them. In other words, this accounting method of accruals records income and expenses in the period in which they are earned and incurred regardless of whether or not cash has actually been received or paid. There are accruals for expenses and revenues:

Accrued expenses

Accrued revenues

Last Updated (Sunday, 05 December 2010 14:57)