explain the accural basis of accounting
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❍ Accrual Basis of Accounting :-
- ✎ Accrual Basis of Accounting is a basis of accounting under which the incomes are recorded or credited to the accounting period in which the same are earned, irrespective of whether they has been actually been received or not as well as the expenses are charged to the accounting period in which the same is related, irrespective of the fact that they have actually been paid or not.
- ✎ Accrual Basis of Accounting is a method of accounting that takes into account all transaction taking place during a particular accounting period, irrespective of whether the same has actually been received or not and paid or not. It takes into account the revenues as well as expenses as and when they are earned or incurred not as the cash for the same has been received or paid respectively.
- ✎ Under Accrual Basis of Accounting revenue is recognized as being and at the point of sale or with the performance of a service. Under this method, net income of an accounting period is the difference between the revenue earned and expenses incurred for earning that revenue during a particular period. Therefore, as per the accrual basis system, the monetary effect of a transaction is taken into account in the period in which they are earned or incurred rather than in the period in which cash is actually received or paid by an enterprise.
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