Accounting _ differences between accrual system and pay-as-you-go implementation values (concept)

2014-07-11 baoxinjian

I. Summary

Accrual: a method to determine the current income and fee based on the income and whether the fee belongs to the current period.

Settlement Implementation: a method to determine the current income and fee based on the actual receipt or payment in the current period.

 

Ii. Case studies

For example, how to differentiate:

Case 1: Company A sold a batch of goods in June September 1, with a value of 10 million (excluding taxes and fees), and received the full amount of money from the other party in the current month. In this case, the accounting process for the current month is as follows:

(1) accounting entries under the accrual basis:

Borrow: bank deposit 10 million

Loan: inventory goods: 10 million

(2) entries under the implementation system of pay-as-you-go:

Borrow: bank deposit 10 million

Loan: inventory goods: 10 million

Because the payment is received in the current month, there seems to be no difference

Case 2: Company A sold a batch of goods in June September 1, with a value of 10 million (excluding taxes and fees) and had not received the payment from the other party at the end of the month.

(1) accounting entries under the accrual basis:

Borrow: Accounts Receivable 10 million

Loan: inventory goods: 10 million

Although the money was not received, but because it was the business of this month, it must be recorded.

(2) In the settlement and payment implementation system, because there is no money in the process, no accounting processing will be performed. When will the money be received and when will the money be processed.

 

At present, according to China's "Enterprise Accounting Standards", China's enterprises adopt the accrual system, but China's administrative units still generally adopt the settlement system.

 

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