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Accural bases of accounting |
| Answer» Accrual Basis of Accounting:\xa0Under this system of accounting, revenue and expenses are recorded when they are recognized i.e., Income is recorded as Income when it is accrued (when transaction takes place) irrespective of fact whether cash is received or not. Similarly, expenses are recorded when they are incurred or become due and not when the cash is paid for them.Under this system, expenses such as outstanding expenses, prepaid expenses, accrued income and received in advance are identified and taken into account.Under the companies’ amendments Act 2013, all companies are required to maintain their accounts according to accrual basis of accounting. | |