ICAI Guidance Note on Accrual basis of accounting 2021

ICAI Guidance Note on Accrual basis of accounting 2021. The importance of Accrual basis of accounting assumes importance as one of the fundamental accounting assumption for preparing and presenting the financial statement is ‘Accrual’.

The Institute of Chartered Accountants of India (ICAI) through its Research Committee has issued revised Guidance Note on Accrual basis of accounting. 

The revised Guidance Note explains the fundamental concept of Accrual Accounting and also explains the process of transition from cash basis of accounting to accrual basis.

The accrual basis of accounting is mandated under section 128 of the Companies Act 2013 as it is considered to be important in giving a true and fair picture of the financial state of affairs than the cash basis of accounting. 

The difference between cash basis and accrual basis of accounting is that under the Accrual basis of accounting, the enterprise records the financial effects of the transactions, events, and circumstances in the period in which they occur rather than in the period(s) in which cash is received or paid by the enterprise.

The revised guidance note highlights the need for accrual basis of accounting, gives guidance in respect of transition from cash basis to accrual basis of accounting,  The revised guidance note covers definition of accrual, accrual basis of accounting, difference between accrual basis of accounting with cash basis of accounting, need for the accrual principle, application of accrual basis of accounting with respect to assets, liabilities with some examples, income and expenses, transition from cash to accrual accounting.

It also contains illustrations showing the difference in recording of transactions in Cash vs. Accrual Basis of Accounting and also gives a chart explaining transition from Cash to Accrual

Download  ICAI Guidance Note on Accrual basis of accounting 2021 Click Here >>

• No separate compensation for loss of love and affection under MV Act – SC
• Trust accredited by National Open School eligible for registration u/s 12AB & u/s 80G
• Delay in furnishing Form 10B – Covid Period to be excluded as per decision of Supreme Court
• Section 271AAB does not grant any immunity from penalty in terms of section 273B
• Engagement of ‘Young Professional’ in the office of the PCCT Bihar & Jharkhand