Professional Documents
Culture Documents
BALANCE SHEET
1. Accrual of income
2. Accrual of expenses
3. Deferred income
4. Prepayments
5. Depreciation
6. Allowances.
Accrual Concept
The accrual concept states that income is
recognized when earned regardless of when
collected and expense is recognized when
incurred regardless of when paid.
Matching Principle
The matching principle aims to align expenses with
revenues. Expenses should be recognized in the
period when the revenues generated by such
expenses are recognized.
Main Purpose of Adjusting
Entries
The main purpose of adjusting entries is to update
the accounts to conform with the accrual concept.