country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!
Add File

Error goes here

Accrual Accounting

Referencing Styles : APA | Pages : 1

Accrual accounting is one of the most accepted accounting methods. In this method, recognition of revenue is made after conduction of sale regardless of cash or credit sale and the recognition of expense is made at the time it is incurred regardless of the time of payment. Moreover, majority of the business owners use accrual accounting method. In accordance with accrual accounting, the accountant is involved in recording revenue or expense at the time of occurrence. There is no relationship with cash inflow or timing of cash inflow.


This method is based on an accounting principle, which is identified as matching principle. Matching principle requires the expense to be recorded in line with revenue. There are certain features of accrual-based accounting system that could be summarised as follows:

There is recognition of revenue at the time it is earned regardless of whether cash is received or not.
There is matching of expenses against revenues made in realisation thereto like consumption of raw materials is matched against the products sold.
Expenses that could be detected clearly with the accounting year are treated in the form of expenses in the year although there might be no direct association with revenue of that year. These costs are adjudged as period costs and they are expensed in the pertinent period like rent, salary and others.
The expenses not charged to income are brought forward and they are kept under constant review along with any other expense that seems to have lost such as deferred revenue expenditure.  


Accrual accounting system provides a number of benefits that could be discussed as follows:

Holistic approach: Accrual accounting is a system of holistic accounting, which is not like cash accounting system. There is no denying the fact that a business does not deal only in cash. In fact, certain other aspects have to be taken into consideration. In this system, it is possible to record all the financial transactions of a business like cash and others and financial statements could be created like the income statement and balance sheet statement for obtaining a holistic view of the performance of the organisation.
Absence of discrepancies: With the immediate record of financial information with its occurrence, there are minimised chances of errors or discrepancies. Moreover, since important data are recorded timely, if any person wants to conduct an audit, there is immediate availability of information.
Increased level of accuracy: Accrual accounting is involved in following double entry system unlike cash accounting system. This implies debiting one account and crediting the other account. As a result, it is possible to observe the way through which one account is minimised and another account is increased. This raise the level of accuracy of accounting and later on during audit, things would become easier.


However, accrual accounting is subject to a number of limitations and they are enumerated briefly as follows:

Complexity: It is easy to record and maintain cash accounting in contrast to the accrual accounting system. On the other hand, accrual accounting is quite difficult to record, as each time there is occurrence of a financial transaction; an entry needs to be made in the books of accounts of the concerned organisation.   
Issues in maintenance: There are many different aspects of a business organisation. In case; if an organisation has large-scale operations, in a single day, there would be record of huge number of business transactions. Maintaining all these transactions on daily basis is never an easy job for an accountant.


For instance, it is assumed that ABC Limited has sales revenue amounting to $10,00,000. From the total sales revenue, 60% of sales are made in cash. The issue here is to conduct the treatment under accrual accounting basis. In accordance with the accrual accounting system, 40% of sales are made in credit terms. However, the credit sales would be treated in the form of sales and there would be generation of profit by incorporating both cash and credit sales, after which there would be deduction of cost of sales and operating expenses. In case of cash accounting, there would be no record of credit sales. The following example shows the instance of accrual accounting system extracted from the statement of financial position of Colgate. It could be seen that Colgate has disclosed accounts receivable of $1,411 million and $1,427 million in 2016 and 2015 respectively.



Therefore, accrual accounting system considers all sales and expenses whether they are earned or paid at any point of time.

Solutions

OR

MyAssignmenthelp.com boasts a talented team of homework help tutors who help students to write homework assignments perfectly. Students, who are searching for answers for can someone do my homework for cheap find our services worthwhile. The reason being our experts provide high quality help with homework writing at affordable prices. Despite providing reasonable academic assistance, we never compromise with the quality of the papers. Some of our popular services are Math homework help, finance homework help, finance homework help, management homework help, etc.

Save Time & improve Grade

Just share requirement and get customized Solution.

watch
question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

Add File

Error goes here

1,546,863

Orders

4.9/5

Overall Rating

5,109

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat. If you are unable to calculate word count online, ask our customer executives.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

752 Order Completed

100% Response Time

Hugh Cleave

Masters in Human Resource Management (MMgt, HRM)

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

230 Order Completed

97% Response Time

Liya Han

Master Of Science in Geotechnical Engineering (MSc Geotec)

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1896 Order Completed

95% Response Time

Herman Berens

MSc in Psychology

London, United Kingdom

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

610 Order Completed

100% Response Time

Cheryl Zhao

PhD in Statistics

Singapore, Singapore

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

Overall Feedback from lecture: This a good piece of work. Clearly there is a very solid foundation here for you to build on and so hopefully the following feedback will help you improve further. Concerning coverage, you have successfully completed ...

flag

User Id: 523049 - 20 Jan 2021

Australia

student rating student rating student rating student rating student rating

i have ordered this assignment with 6 different copies for me and for my friends, inside this assignment there is an essay writing and grammar questions , i surprised that all grammar questions are different answers but it should be the same answer,...

flag

User Id: 124147 - 20 Jan 2021

Australia

student rating student rating student rating student rating student rating

WHAT AN FANTASTIC OUTCOME I RECEIVED!! My essay subject was very difficult with many parts! My MAH\'s expert NAILED IT!!!! thanks a million! I WILL BE BACK!

flag

User Id: 124147 - 20 Jan 2021

Australia

student rating student rating student rating student rating student rating

A very well written post, thank you for the expert who worked on this and look forward to continue working with you on the remaining 40 discussion post yet to come.

flag

User Id: 348179 - 20 Jan 2021

Australia

student rating student rating student rating student rating student rating
Accrual Accounting has been added in your library.
callback request mobile
Have any Query?