Accrual Basis of Accounting, Adjusting Entries, Adjusted Trial Balance & Closing Entries
The Complete Beginner-to-Advanced Guide to the Accounting Cycle (Simple, Clear & Exam-Ready) Introduction: To truly understand accounting, you must understand this flow: 👉 Accrual Accounting → Adjusting Entries → Adjusted Trial Balance → Closing Entries These steps form the backbone of accurate financial statements. Core Idea Accounting is not just about cash. It is about recording income and expenses at the right time so that profit is shown correctly. 1. Accrual Basis of Accounting What is Accrual Accounting? The Accrual Basis of Accounting means: Income is recorded when it is earned Expenses are recorded when they are incurred It does not depend on cash movement . Simple Definition Accrual accounting records transactions when they occur, not when cash is received or paid. Accrual vs Cash Basis Feature Accrual Basis Cash Basis Income Recorded when earned Recorded when received Expense Recorded when incurred Recorded when paid Accuracy High Lower Used by Companies & l...