BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Accrual accounting is an accounting method in which payments and expenses are credited and debited when earned or incurred. Accrual accounting differs from cash basis accounting, where expenses are recorded when payment is made and revenues recorded when cash is received.

Detailed explanation-2: -ACCRUAL BASIS ACCOUNTING Under the accrual basis of accounting, revenues are recognized when they are earned regardless of when cash is received, and most expenses are recognized when a liability is incurred regardless of when paid.

Detailed explanation-3: -Accrual accounting requires revenues and expenses to be recorded in the accounting period that they are incurred. Since accrued expenses are expenses incurred before they are paid, they become a company liability for cash payments in the future. Therefore, accrued expenses are also known as accrued liabilities.

Detailed explanation-4: -Accrual Basis of Accounting: Reporting income when it is earned and expenses when they are incurred. Cash Basis of Accounting: Reporting income when the cash is received and expenses when the cash is paid.

Detailed explanation-5: -Under the accrual basis of accounting, revenues and expenses are recorded as soon as transactions occur. This process runs counter to the cash basis of accounting, where transactions are reported only when cash actually changes hands.