This principle allows greater evaluation of actual profitability and performance (shows how much was spent to earn revenue). office salaries and other administrative expenses). Only if no connection with revenue can be established, cost may be charged as expenses to the current period (e.g. Expenses are recognized not when the work is performed, or when a product is produced, but when the work has been done or the product has been delivered. Expenses have to be matched with revenues as long as it is reasonable to do so. If a company or business believes that they may not receive payment for services or goods rendered, they may not record related revenue. This is the essence of accrual basis accounting. It does not matter if cash has been received or paid.
0 Comments
Leave a Reply. |