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According to accural concept, expenses incurred and revenue earned during the accounting period should be recorded in the same period of accounts regardless of the actual receipt of payment of cash.
According to prudence concept revenue should be recognized only when it has been realized.Revenue is recognized in the period in which it is earned irrespective of the fact whether it is received or not during that period.
for example: when a product delivered to a customer the company records a revenue even though the customer will pay after 30 days.
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Advantages of prudence concept in financial accounting?
list 5 advantages of prudence concept
What is the accrual concept of accounting?
The accrual concept concerns the matching of costs and revenues for the reporting period.
What is the difference btwn Matching Accrual and realization concept?
Accrual concepts use the matching of expenses to get an overall picture of a person's account. A realization concept is based on the results of the accrual process.
Does accounting concepts conflict?
Accruals and prudenceThe accruals concept requires future income (e.g. in relation to credit sales) to be accrued. The prudence concept dictates that caution should be exercised, so that if there is doubt about the subsequent receipt, no accrual should be made.Consistency and prudenceIf circumstances change, prudence may conflict with the consistency concept, which requires the same treatment year after year.In both situations, prudence must prevail.
What concept is used in allowance for doubtful debts?
Prudence concept
What are the accounting principles that must be obserb in a accounting?
source : "Ultimate book of accountancy" Ans: Main concepts of accounting are (1) Business entity concept (2) Money Measurement concept (3) Cash and Accrual Concept (4) Prudence concept (5) Cost concept (6) Matching Concept For more detail.... see... "ULTIMATE BOOK OF ACCOUNTANCY" Published by vishvas publications ... vishvasbook@yahoo.com
Is the matching and accrual concepts similar?
Matching concept is the basis for accrual accounting system so Yes they are same.
Explain the importance of the Prudence concept?
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Does the matching concept support accrual accounting principles?
yes
What is associate with the accrual concept of accounting?
Revenue is recognised when earned.
Is associated with the accrual concept of accounting?
Revenue is recognised when earned.
What is associated with accrual concept of accounting?
Revenue is recognised when earned.
