What are accruals accounts?

The financial reports reflect the total resources in and out in the financial period, not just the cash and bank movements. For example, if goods have been received but not yet paid for an adjustment will be made to include the cost of these goods in expenditure.  Similarly, if payments have been made in advance for the next financial period an adjustment will be made.  Where large, expensive assets are bought that will be used for several years, the cost of these is spread over several years (rather than leaving the total expense in the year of purchase).  This is known as capitalising and depreciating the assets.

Posted in: Accounts & Reporting

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