Definition of accruals concept
One of the fundamental accounting concepts. If the only records were of cash received or paid, this would not be giving a fair view of an organisations profit or loss. The business might have sold goods but not yet received the money. Equally, it may have incurred costs, which it has not yet paid. Under the accruals concept, the profit takes into account the earned income and incurred expenses, regardless of whether the cash has been received or paid.
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