Write a note accrual basis of accounting.

1.	Write a note accrual basis of accounting.
Answer» The accrual method records income items when they are earned and records deductions when expenses are incurred. Accrual basis of accounting matches revenue to the time period in which they are earned and matches expenses to the time period in which they are incurred. While it is more complex than cash basis accounting, it provides much more information about the business. The accrual basis allows matching revenue to the expenses incurred in earning them giving more meaningful financial report.

Answer»

The accrual method records income items when they are earned and records deductions when expenses are incurred. Accrual basis of accounting matches revenue to the time period in which they are earned and matches expenses to the time period in which they are incurred.

While it is more complex than cash basis accounting, it provides much more information about the business. The accrual basis allows matching revenue to the expenses incurred in earning them giving more meaningful financial report.

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