Accruals-based accounting

Question 1

Accruals-based Accounting

Answer 1

This type of accounting is more complex. Accruals are payments or receipts that are due, but haven’t yet been paid or received, which is where the name comes from. Accruals-based accounting also takes into account the tangible assets of an organization.

Question 2

Accruals-based accounting uses double-entry bookkeeping, which recognizes that there are always two sides to every transaction the

Answer 2

giver and the receiver.

Question 3

Accruals-based accounting

The terminology used for transactions is income and expenditure. Income is recorded when it is

Answer 3

due or earned, rather than when the cash is actually received.

Question 4

Accruals-based accounting

The terminology used for transactions is income and expenditure. Expenditures are recorded as they are

Answer 4

incurred, not when the invoices are paid.

Question 5

Accruals-based accounting method overcomes the issue of

Answer 5

time delays with credit transactions.

Question 6

Accruals-based accounting method can deal with all types of transactions, including

Answer 6

non-cash transactions like in-kind donations and fixed assets.

Question 7

Accruals-based accounting means that an

Answer 7

organization has a more up-to-date record of income and expenditures, and a more comprehensive picture of their financial position.

Question 8

accounts payable and accounts receivable ledgers that contain information on

Answer 8

invoices received from vendors or invoices issued to customers. These two books of account are used in accruals-based accounting

Question 9

general or nominal ledger, used in accruals-based accounting and serves as

Answer 9

the main book of account

Question 10

journal register or day book recording non-monetary transactions, for example

Answer 10

recording a donation in-kind or an adjustment to correct an accounting error. This is used in accruals-based accounting

Question 11

ACCRUALS

Skill level:

Answer 11

advanced bookkeeping

Question 12

ACCRUALS

Transaction types:

Answer 12

cash and credit

Question 13

ACCRUALS

Main book of account:

Answer 13

general ledger

Question 14

ACCRUALS

Non-cash transactions:

Answer 14

yes

Question 15

ACCRUALS

Accounting system:

Answer 15

double entry

Question 16

ACCRUALS

Assets and liabilities:

Answer 16

yes

Question 17

ACCRUALS

Reports:

Answer 17

statement of income & expenditure with balance sheet

Question 18

Accruals-based books of account for this type of accounting, the main book is

Answer 18

the general ledger, which includes information coming from cashbooks and other ledgers or source documents. It records income when it is earned, not when it is received, and records expenditures as they are incurred, not actually paid.

Question 19

Which system do you think most medium-to-large NGOs and non-profits use?

Answer 19

accruals-based

Question 20

They use the simpler cash accounting basis during the year and then, with the help of an

Answer 20

external accounting firm, convert the cash-based figures to an accruals basis at year end for the annual financial statements and audit.

Question 21

Cash-based books of account is

Answer 21

simple and shows money paid and money received. So, the main book of account is the cashbook, which records receipts and payments when they happen. Note that a cash book is also present in an accruals-based system, but it’s not the main book of account.