Archive / 1.10 Accruals

RSS feed for this section

Recognizing accruals

The thing with accruals basis of accounting is that sometimes you need to accrue for some expenses. Occasions such as this arise when you need or want to close your reporting period but as it happen, your supplier is set to send you an invoice for services or goods received within the period you want […]

Releasing reserves

As you obtain information that the entity is likely to incur outflows from certain events, you treat them as provisions and recognize respective liabilities and expenses as soon as the information becomes available to you. However, what happens if it turns out that there have been changes to the situation so that that entity is […]

Provisions for future expenditure

As you know, an expense arises when the obligation to transfer economic benefits arises, not when the expenditure actually incurred. That’s called accrual based accounting and as such it’s important to understand all conditions of certain agreements and transactions. It’s crucial to see those moments the obligation actually arises.  (more…)

Derecognizing accruals

You’re accruing for missing invoices and possibly even revenue for which you haven’t issued an invoice yet into your balance sheet. There is a certain amount as a liability or an asset (in case of revenue accrual) on your balance sheet and everything couldn’t be more accurate. All your expenses and income are recognized in […]