Accrual accounting provides an accurate way of matching business income and expenses to the correct time periods, explains Nolo. Businesses with sales of over $5 million per year or inventories exceeding $1 million are l... More » notes that a prepaid expense is one that has been paid in advance of products being delivered or services being rendered. An accrual is an expense that is paid after it is incurred, as when a co... More »

Accounting is important because it provides an objective picture of a business' financial success. In addition, accurate bookkeeping and accounting is extremely vital for tax and legal purposes. Many companies are requir... More » Business & Finance Business Resources Accounting

An income statement that uses accrual-basis accounting methods recognizes losses more quickly, avoiding the distortion that sometimes occurs with cash-basis accounting, delaying the recognition of losses for several year... More » Business & Finance Business Resources Accounting

Accrual accounting occurs when a business counts transactions on the books regardless of when they are paid in full, according to Nolo. Transactions are counted when an order is made or goods are received when using the ... More »

People need accounting because it keeps a record of cashflow, produces financial reports and monitors business expenses of an organization, according to the Houston Chronicle. Accounting helps owners make vital decisions... More »

Companies use adjustment entries to align expenses and revenues to the accounting period where they occurred. The process ensures that all income, expense, asset and liability accounts reflect their true values when repo... More »