Accounting Concepts- Accruals Concept
Definition
The accruals concept involves recording income and expenses as they accrue, as distinct from when they are received or paid.
Example
Example:
A Nigerian construction company records revenue from a December contract in December’s accounts, even though the client won’t actually pay until February because the income was genuinely earned in December.
Example:
A Boston law firm records December salary expenses in December’s books even though staff are paid in January, matching costs to the period they were actually incurred.