Accrual regulates the time of recognition of revenues and expenses

According to this principle, revenues and expenses are recognized in the period in which they were accrued, that is earned implemented, regardless of when actually received or paid in cash. An alternative method is a method of cash income and expenses for which revenues are recognized only after receipt of the money to the cashier of the bank or its correspondent account, and the cost - only from the date of payment in cash or with a correspondent account. Consider the content of key provisions of the accrual of income and expenses. All completed transactions are recorded when they occur, regardless of when cash is received or paid. Accrual basis, as noted, means that the income earned (recognized) in the period when the business operation, implementation of which just earned income, has taken place, but not when the money is actually received. Based on this principle, income is recognized when the sale of an asset or the provision of services when it takes place and earning, and not the date of receipt of the money in cash or on account of sale of an asset or service. In order to apply accrual main criterion is that the income is considered earned when the process of earning substantially completed. In case of sale of goods, this process is largely completed when the ownership of goods passes from seller to buyer. If services are provided, then the process of making is largely completed when the service is rendered, not when the money is fully paid. The benefits of accrual include the fact that its application allows users to be informed not only on the receipt or payment of cash in the past, but also the obligations to pay money or to receive them in the future. Topic: The role of accounting in the management of the bank, its types and destination