What is meant by accrual basis.

How does it works? Where does it works? What is the journal entry for that. Where it comes in the final account?

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  • Nov 23rd, 2007

Accurual basis means recognising the expenses/income which is accrued to the period.But the actual expenditure is not paid.ie.,there is no outflow of cash.say for example rent for the month of march is paid in april but at year end closing the rent which is not paid is recognised as expense since it relates to the period.This is accrued expenses.

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