[sdc80]

How does the ‘accruals concept’ affects the profit and loss account & the balance sheet?

[accteacher]

An accrual is an amount owed at the end of the accounting year by the business. It has to be recorded in the profit and loss and the balance sheet. An example would be wages due. The wages due figure would be added to the wages figure in the profit and loss and then recorded as a liability in the balance sheet because the company has not paid it yet - they owe it.