What is the accrual concept in accounting?

Question

Accepted Answer

Accrual concept in accounting recognizes revenues and expenses when they are incurred, regardless of when cash is exchanged.

Accrual accounting records revenues and expenses when they are earned or incurred, not when cash is received or paid.
It ensures that financial statements accurately reflect the financial position of a company at a given point in time.
Accrual concept helps in matching revenues with expenses, providing a more accurate picture of a company's financial performance.
Examples include recognizing revenue when a service is provided, even if payment is not received until a later date, and recording expenses when goods are received, even if payment is made at a later time.

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