Whether it is required to follow the accrual concept on a montly basis?

All DiscussionWhether it is required to follow the accrual concept on a montly basis?
angirusya Staff asked 2 years ago

During observing accounting books, i have severally found that most of the expenses which are of a particular month are booked in some other months, but anyhow they are booked before the end of the F.Y. So, is it required to be booked that expense at the end of that particular month, or can be booked anyhow before the end of the F.Y.

Rajat Goyal Staff replied 2 years ago

If accrual system is followed, expenses should be on the same day when it is accrued, as there may be changes in taxation laws in a year, that would impact the tax on profit calculated by entity, moreover to know the position of business, big companies & entities want the status of their position everyday, listed companies publish there statements quarterly, on that basis people thinks about whether to invest in that company or not, as far as small business and proprietorship’s are concerned, proprietor of that are not much concerned if the expense is not booked in the month it was incurred, for them booking in financial year is the thing, as otherwise it would become a prior period expense.