accruals concept of accounting

accruals concept of accounting

the principle that all a firm's costs and revenues should be counted in the company's accounts from the date when the expenses are legally incurred and when the revenues are receivable, not when the expenses are actually paid or the cash received. Organizations such as local drama groups which require less formal accounts may settle for RECEIPTS AND PAYMENTS ACCOUNTS which deviate from the accruals principle in the interests of simplicity; though even here income and expenditure accounts which follow the accruals principle are more common.
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