For example, the sale of goods delivered in December is December revenue even if collected in January. All financial statements except the cash flow statement are prepared on an accrual basis.
Source: TMS 1, MSUGT
Related terms
Periodicity principleThe principle of dividing an entity's continuing life into periods and reflecting each period's income and expenses in that period's results.Prepaid expensesAmounts already paid that will become expenses in future periods, such as rent or insurance premiums paid in advance.Deferred incomeIncome collected or invoiced in advance that will be earned in future periods, such as rent or subscription fees received in advance.Accounting estimatesThe determination by management judgement of amounts that cannot be measured precisely, such as provisions, useful lives, expected credit losses and fair values.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Allowance for doubtful receivablesAn allowance made for receivables whose collection has become doubtful, recognising the expected loss as an expense.
Last updated: October 31, 2026 · This definition is for general information only.