What are accruals?

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viditagarwal2
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by viditagarwal2 » Mon Apr 09, 2018 3:19 pm
Hello everyone,

This is Vidit I am little bit confused about accruals. Can anyone describe about same?
Thanks in Advance!
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Ryan
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by Ryan » Mon Apr 09, 2018 3:35 pm
Hi,

It could be a number of things Adding together of interest for example) - what does it relate to specifically?

Regards
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Foggy
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by Foggy » Mon Apr 09, 2018 3:36 pm
An accrual is something that has been accounted for but not actually happened yet. So they might record an expense on 9th April, but not actually pay it out until the following week. So the accounts will show it as paid, but it will still be sat in the bank account.
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Lisa Thomas
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by Lisa Thomas » Mon Apr 09, 2018 3:51 pm
sjonesdiscussion
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by sjonesdiscussion » Wed Apr 11, 2018 8:29 am
Accruals are adjustments for 1) revenues that have been earned but are not yet recorded in the accounts, and 2) expenses that have been incurred but are not yet recorded in the accounts. The accruals need to be added via adjusting entries so that the financial statements report these amounts.

An example of an accrual for revenue involves your electric utility company. The utility used coal and many employees in December to generate electricity that customers received in December. However, the utility doesn't bill the electric customers for the December electricity until the meters are read in January. To have the proper amounts on the utility's financial statements, there needs to be an adjusting entry to increase revenues that were earned in December and the receivables that the utility has a right to as of December 31.

An example of an accrual involving an expense is an employee's bonus that was earned in 2012, but will not be paid until 2013. The 2012 financial statements need to reflect the bonus expense and the bonus liability. Therefore, prior to issuing the 2012 financial statements an adjusting entry is prepared to record this accrual.

For more details you can visit no following links...

https://www.nomismasolution.co.uk/bookkeeping-software
https://www.gov.uk/running-a-limited-co ... ng-records
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