Читать книгу Cost Accounting For Dummies - Kenneth W. Boyd - Страница 57

The accrual method of accounting recognizes revenue when it’s earned and expenses when they are incurred. Accrual accounting is more complicated than the cash basis you just read about (but only a little bit). That’s because your cash may not move in the same period when revenue or expense is recognized.

Say you ship goods to your client in late January. The customer pays for the order in February. You completed everything that the customer required in January, so you should recognize revenue in January. But the cash moves (you get paid) in February.

Accrual accounting requires you to make an entry to accounts receivable and to sales revenue in January. The entry shows that you earned the revenue, even though you haven’t been paid yet. Accounts receivable means that you are owed money for a sale that was posted to revenue in January. When the cash is received in February, you reduce accounts receivable and increase cash.

Assume an employee works in your store during the last week of May. Your next payroll is paid in the first week of June. Your store has sales in May. You should include the salary expense for the employee’s work during May with the May revenue. That’s how the matching principle works. The process matches the effort (costs) with the reward (revenue). However, the cash doesn’t move until June.

Using accrual accounting, you make an entry to accounts payable and salary expense in May. Accounts payable represents an amount you owe as a business expense. So you post the salary expense in May. When you pay the employee in June, you reduce accounts payable and you reduce cash.