ACC 406 Lecture : accural.doc
22 Apr 2012
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Document Summary
Before the final accounts of a business are completed, it is usually necessary to make adjustments to the trial balance. For example, some transactions may not yet have been completed (e. g. a supplier has not sent an invoice for goods or services that have already been received). Some transactions recorded in the accounts may relate to a future accounting period (e. g. a payment has been made for an advertising campaign that will run several months in the future). Accruals are a common example of the adjustments made before the accounts can be finalized. Accruals arise out of the process of matching expenditure or income to the accounting period in which it was incurred rather than paid. The accruals concept one of the fundamental accounting concepts requires that costs and revenues are recognised in the accounts when incurred or earned not when the money is received or paid.
