, Accruals concept
-
Accruals concept : expenses and revenues are recorded me the period they occur,
regardless of whether or not cash is involved .
D It's rare for a business to make physical cash payments to their supplier .
Example Fordham paid £8915 for rent during the current year At the
, .
beginning of the year £873 had been brought forward as prepaid for rent and
, ,
at the end of the year £1408 had been prepaid ,
.
How much would be shown as the expense for rent wi the income statement
for the current period ?
£873 t £9815 -
£14088 = £9280
Matching
-
Principle
P¥t¥¥ae : to create a cause-and-effect relationship
to the
,
wish
the the financial statements
dwelt
gawking
purpoa more informative
users for decision-making
Revenues
.
.
the principle seeks ;
matching
to aureate caudal
"
i the revenues are
offer so
a
a .
I
. .
f observed against the
reta :
to
expenses vis curved
. .
.
I
i i generate them .
I i
t l
l
Time
l l l
June Tan! Die Tune
Past Reportingi financial Reporting i
1
period
1 c- ,
Period
i i
.
'
I
, Capitalisation
capitalisation the accounting :
process of recording future expenditure or
future revenue as an asset .
-
Reporting Reeg oud One Period
Revenue
I
begin with which
[ extends we
one
a revenue
reporting period .
Rev Rev peer
1-I 1-1 1-1
other www.aumignfaemreu.emumit.fiFifer
in size to each
revenues equivalent
retorting period .
Rev
1-1 Capitalised Asset wi the Balance sheet
n Rev
wire 1-1
.
.
the asset is then converted
.
.
bade nito a revenue in each
new financial period .
D Expenses can also be capitalised .
Capitalisation of a future revenue or future Expense
-
-
Accruals concept : expenses and revenues are recorded me the period they occur,
regardless of whether or not cash is involved .
D It's rare for a business to make physical cash payments to their supplier .
Example Fordham paid £8915 for rent during the current year At the
, .
beginning of the year £873 had been brought forward as prepaid for rent and
, ,
at the end of the year £1408 had been prepaid ,
.
How much would be shown as the expense for rent wi the income statement
for the current period ?
£873 t £9815 -
£14088 = £9280
Matching
-
Principle
P¥t¥¥ae : to create a cause-and-effect relationship
to the
,
wish
the the financial statements
dwelt
gawking
purpoa more informative
users for decision-making
Revenues
.
.
the principle seeks ;
matching
to aureate caudal
"
i the revenues are
offer so
a
a .
I
. .
f observed against the
reta :
to
expenses vis curved
. .
.
I
i i generate them .
I i
t l
l
Time
l l l
June Tan! Die Tune
Past Reportingi financial Reporting i
1
period
1 c- ,
Period
i i
.
'
I
, Capitalisation
capitalisation the accounting :
process of recording future expenditure or
future revenue as an asset .
-
Reporting Reeg oud One Period
Revenue
I
begin with which
[ extends we
one
a revenue
reporting period .
Rev Rev peer
1-I 1-1 1-1
other www.aumignfaemreu.emumit.fiFifer
in size to each
revenues equivalent
retorting period .
Rev
1-1 Capitalised Asset wi the Balance sheet
n Rev
wire 1-1
.
.
the asset is then converted
.
.
bade nito a revenue in each
new financial period .
D Expenses can also be capitalised .
Capitalisation of a future revenue or future Expense
-
