Accrual accounting assigns revenue and expenses to the periods in which they are earned or incurred rather than solely to payment dates. Receivables can arise before collection and expenses before supplier payment.[1]
A prepaid service may relate to several future periods, requiring separate tracking of cash movement and expense recognition. This accounting concept is not synonymous with a VAT cash-accounting scheme; the name alone does not establish the appropriate tax treatment. Separate timing differences when reconciling profit and cash.
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Compiled with AI assistance using public sources. General explanation, not individual legal or tax advice. Describing a concept does not mean Zoloo offers it as a feature.