Question

difference between realisation and accrual concept

Answer 1

In Accounting Accrual means to recognize an event/transaction in the financial statements which involves transfer of value betweentwo parties whether the business immediately has received the cash or not for that particular event. ... On the other hand Realizationmeans receiving the actual cash for the transaction.

Answer 2

Answer:

The realization concept and accrual concept are two important accounting concepts that help in recording and reporting financial transactions in a business.

The main differences between the two are as follows:

Explanation:

Realization Concept: The realization concept is used for recording revenue when it is earned and when it is realized. It means that revenue is recognized when goods are sold or services are provided, and payment is received for the same. This concept is used to ensure that the financial statements of a business accurately reflect its financial position.

Accrual Concept: The accrual concept is used to record revenue and expenses when they are incurred, regardless of whether payment has been made or received. This means that revenue is recognized when goods or services are provided, even if payment is not received at the time. Similarly, expenses are recognized when they are incurred, even if payment is not made at the time.

The key difference between the two concepts is that the realization concept focuses on when payment is received, while the accrual concept focuses on when revenue and expenses are incurred. Both concepts are important for accurate financial reporting, and businesses must choose the appropriate concept for their financial transactions.

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