Accruals basis - Revision history

imported>Doug Williamson: Add links.

2021-09-14T14:23:18Z

Add links.

← Older revision		Revision as of 14:23, 14 September 2021
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	* [[Accruals accounting]]		* [[Accruals accounting]]
	* [[Accruals concept]]		* [[Accruals concept]]
			* [[Accrued income]]
	* [[Cash basis]]		* [[Cash basis]]
			* [[Deferred income]]
	* [[Financial reporting]]		* [[Financial reporting]]
	* [[Financial statements]]		* [[Financial statements]]

imported>Doug Williamson: Update first example.

2020-10-03T22:29:45Z

Update first example.

← Older revision		Revision as of 22:29, 3 October 2020
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	:<span style="color:#4B0082">'''Example: Spreading payment over two years'''</span>		:<span style="color:#4B0082">'''Example: Spreading payment over two years'''</span>

	:A customer pays ~~GBP100~~ for a service that runs for two years. ~~GBP100~~ is paid at the beginning of the first year.		:A customer pays GBP 100k for a service that runs for two years. GBP 100k is paid at the beginning of the first year.

	:Reporting this income on an accruals basis means ~~GBP100~~ would be spread over the two year service period, so ~~GBP50~~ in Year 1 and ~~GBP50~~ in Year 2, rather than reporting the total payment of ~~GBP100~~ in Year 1 only.		:Reporting this amount in the income statement on an accruals basis means the GBP 100k would be spread over the two year service period, so GBP 50k in Year 1 and GBP 50k in Year 2, rather than reporting the total payment of GBP 100k in Year 1 only.

imported>Doug Williamson: Add example and minor wording changes.

2020-09-23T13:54:36Z

Add example and minor wording changes.

← Older revision		Revision as of 13:54, 23 September 2020
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	In financial reporting, the appropriate spreading of income and expenditure into the periods to which they relate.		In financial reporting, the appropriate spreading of income and expenditure into the periods to which they relate.

	This spreading may differ from the period in which the ~~related~~ cash receipt or payment takes place.		This spreading may differ from the period in which the cash receipt or payment actually takes place.


			:<span style="color:#4B0082">'''Example: Spreading payment over two years'''</span>

			:A customer pays GBP100 for a service that runs for two years. GBP100 is paid at the beginning of the first year.

			:Reporting this income on an accruals basis means GBP100 would be spread over the two year service period, so GBP50 in Year 1 and GBP50 in Year 2, rather than reporting the total payment of GBP100 in Year 1 only.


	(An alternative - simpler - basis of accounting is a receipts and payments basis - usually only used for small entities, for example not-for-profit clubs.)		(An alternative - simpler - basis of accounting is a receipts and payments basis - usually only used for small entities, for example not-for-profit clubs.)
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	* [[Mark to market basis]]		* [[Mark to market basis]]
	* [[Realisation]]		* [[Realisation]]
			* [[Receipts and payments accounting]]
	* [[True and fair view]]		* [[True and fair view]]

	[[Category:Accounting,_tax_and_regulation]]		[[Category:Accounting,_tax_and_regulation]]

imported>Doug Williamson: Add link.

2020-09-16T12:43:05Z

Add link.

← Older revision		Revision as of 12:43, 16 September 2020
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	* [[Accruals accounting]]		* [[Accruals accounting]]
	* [[Accruals concept]]		* [[Accruals concept]]
			* [[Cash basis]]
	* [[Financial reporting]]		* [[Financial reporting]]
	* [[Financial statements]]		* [[Financial statements]]

imported>Doug Williamson: Mend link.

2020-09-16T10:06:34Z

Mend link.

← Older revision		Revision as of 10:06, 16 September 2020
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	* [[Accrual]]		* [[Accrual]]
	* [[Accrual rate]]		* [[Accrual rate]]
	* [[Accruals ~~accouning~~]]		* [[Accruals accounting]]
	* [[Accruals concept]]		* [[Accruals concept]]
	* [[Financial reporting]]		* [[Financial reporting]]

imported>Doug Williamson: Add link.

2020-09-16T10:06:19Z

Add link.

← Older revision		Revision as of 10:06, 16 September 2020
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	* [[Accrual]]		* [[Accrual]]
	* [[Accrual rate]]		* [[Accrual rate]]
			* [[Accruals accouning]]
	* [[Accruals concept]]		* [[Accruals concept]]
	* [[Financial reporting]]		* [[Financial reporting]]

imported>Doug Williamson: Switch ordering of 1st and 2nd definitions.

2020-09-16T10:05:11Z

Switch ordering of 1st and 2nd definitions.

← Older revision		Revision as of 10:05, 16 September 2020
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	1.		1. ''Financial reporting - accruals concept''

	In financial ~~accounting~~, the spreading of ~~profits~~ and ~~losses on hedging instruments over~~ the ~~life of the underlying exposure being hedged~~.		In financial reporting, the appropriate spreading of income and expenditure into the periods to which they relate.

			This spreading may differ from the period in which the related cash receipt or payment takes place.

	2. ~~''Financial reporting - accruals concept''~~		(An alternative - simpler - basis of accounting is a receipts and payments basis - usually only used for small entities, for example not-for-profit clubs.)

	~~In accounting more generally, the appropriate spreading of income and expenditure items into the periods to which they relate.~~

	~~This may differ from the period in which the associated cash receipts or payments take place~~.		2. ''Financial reporting - hedging.''

	~~(An alternative simpler basis of~~ accounting ~~would be a cash basis - usually only used~~ for ~~small entities for example not-for-profit clubs~~.)		In financial accounting for hedging instruments, the spreading of profits and losses on the hedging instruments over the life of the underlying exposure being hedged.

			This accounting treatment is an application of the accruals concept.

	3.
			3. ''Tax''.

	A basis of taxation which follows the accruals basis of financial accounting.		A basis of taxation which follows the accruals basis of financial accounting.

	In the UK, the Companies Act 2006 requires directors to ensure that annual accounts give a true and fair view. Accruals accounting would almost invariably be required, in order to give a true and fair view.		In the UK, the Companies Act 2006 requires directors to ensure that annual accounts give a true and fair view.

			Accruals accounting would almost invariably be required, in order to give a true and fair view.

	Loan relationship income is taxed on an accruals basis for UK tax purposes.		Loan relationship income is taxed on an accruals basis for UK tax purposes.
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	* [[Accruals concept]]		* [[Accruals concept]]
	* [[Financial reporting]]		* [[Financial reporting]]
	* [[~~Kd(1-t)~~]]		* [[Financial statements]]
			* [[Hedging]]
	* [[Loan relationship]]		* [[Loan relationship]]
	* [[Loan relationship income]]		* [[Loan relationship income]]

imported>Doug Williamson: Add header and links.

2020-09-10T11:23:29Z

Add header and links.

← Older revision		Revision as of 11:23, 10 September 2020
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	2.		2. ''Financial reporting - accruals concept''

	In accounting more generally, the appropriate spreading of income and expenditure items into the periods to which they relate.		In accounting more generally, the appropriate spreading of income and expenditure items into the periods to which they relate.
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	* [[Accrual]]		* [[Accrual]]
	* [[Accrual rate]]		* [[Accrual rate]]
			* [[Accruals concept]]
			* [[Financial reporting]]
	* [[Kd(1-t)]]		* [[Kd(1-t)]]
	* [[Loan relationship]]		* [[Loan relationship]]
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	* [[Mark to market basis]]		* [[Mark to market basis]]
	* [[Realisation]]		* [[Realisation]]
			* [[True and fair view]]

	[[Category:Accounting,_tax_and_regulation]]		[[Category:Accounting,_tax_and_regulation]]

imported>Doug Williamson: Add examples.

2020-05-26T15:01:07Z

Add examples.

← Older revision		Revision as of 15:01, 26 May 2020
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	This may differ from the period in which the associated cash receipts or payments take place.		This may differ from the period in which the associated cash receipts or payments take place.

	(An alternative simpler basis of accounting would be a cash basis.)		(An alternative simpler basis of accounting would be a cash basis - usually only used for small entities for example not-for-profit clubs.)


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	A basis of taxation which follows the accruals basis of financial accounting.		A basis of taxation which follows the accruals basis of financial accounting.

			In the UK, the Companies Act 2006 requires directors to ensure that annual accounts give a true and fair view. Accruals accounting would almost invariably be required, in order to give a true and fair view.

	Loan relationship income is taxed on an accruals basis for UK tax purposes.		Loan relationship income is taxed on an accruals basis for UK tax purposes.

imported>Doug Williamson: Layout.

2020-04-22T13:39:35Z

Layout.

← Older revision		Revision as of 13:39, 22 April 2020
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	In accounting more generally, the appropriate spreading of income and expenditure items into the periods to which they relate.		In accounting more generally, the appropriate spreading of income and expenditure items into the periods to which they relate.

	This may differ from the period in which the associated cash receipts or payments take place. (An alternative simpler basis of accounting would be a cash basis.)		This may differ from the period in which the associated cash receipts or payments take place.

			(An alternative simpler basis of accounting would be a cash basis.)


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	A basis of taxation which follows the accruals basis of financial accounting.		A basis of taxation which follows the accruals basis of financial accounting.

	Loan relationship income is taxed on an accruals basis for UK tax purposes.		Loan relationship income is taxed on an accruals basis for UK tax purposes.