Lec 3 - accrual concept: recognition of expenses and revenue

accrual basis

revenues are recognized when earned and expenses are recognized when incurred

basically:

revenue recognized when service provided/goods sold

cash basis

revenues are recognized when cash is received and expenses recorded when cash is paid

NOT FOR ACCOUNTING STANDARDS

net profit formula

revenues - expenses

revenue recognition principle

revenues should be recognized when the major economic activities have been completed,

sales are recognized when goods are sold and delivered to customers or services are rendered