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This method is more appropriate in assessing the health of the organisation in financial terms. Description: To understand accrual accounting, let's first understand what we mean when we say the word 'accrual'.

Accrual refers to an entry made in the books of accounts related to the recording of revenue or expense paid without any exchange of cash. The use of accrual accounting is typically useful in businesses where there are a lot of credit transactions or the goods and services are sold on credit, which simply means that there was no exchange of cash.

Let's understand Accrual accounting with the help of an example.

Accrual Accounting

Here, any revenue or income which is generated by sales and expenses incurred are recorded as they occur. If you sell your goods or products on credit, the sale is recorded in the books based on the invoice generated. There is a possibility that you may not have received the payment by cash at that particular point in time. An expense is occurred or recorded when the raw material is ordered and not when the actual payment is made to the supplier by either cash or cheque.

Class 9-10 Accounting text book bengali

The only drawback of this type of accounting system is that you, as a firm, might end up paying tax on revenues even when you might have not received it credit. Under the accrual method of accounting expenses are balanced with revenues on the income statement. It helps give a better picture of the company's financial condition.

Usually the credit period is short ranging from few days to months or in some cases maybe a year. Description: The word receivable refers to the payment not being realised. This means that the company must have extended a credit line to its customers.

Usually, the company sells its goods and services both in cash as well as on credit. When a company extends credit to the customer, the sale is realised when the invoice is generated, but the company extends a time period to the customers to pay the amount after some time. The time period could vary from days to a few months.

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Account Receivables AR are treated as current assets on the balance sheet. Let's understand AR with the help of an example. See inside this book pdf download Free bengali vatsayan kamsutra book pdf download. This section contains free e- books and guides on Accounting, some of the resources in this section can be viewed online and some of them can be downloaded.

Free download lesson plan, resume sample and terms paper in PDF. The board reserve rights for making or changing any topic and structure on the books. Learn about the most important accounting concepts such as bookkeeping, the double entry system, accruals and matching principles, how to prepare financial statements, and more!

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The idea is to check and verify the accounts by an independent authority to ensure that all books of accounts are done in a fair manner and there is no misrepresentation or fraud that is being conducted.

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