Good afternoon, my name is Rocio Peña and I am going to talk about accrual accounting.

Accrual accounting is one of the two accounting methods. The other one is cash accounting
(contabilidad de caja).

Accrual accounting is an accounting method where the incomes and expenses are registered when
a transaction is produced, and not necessarily when the payment is made.

This method tells us that the incomes and expenses must be recognized in the same period.

Accrual accounting (or accumulation accounting) measures the performance and position of a
company through the recognition of economic events regardless of when the cash transactions are
made. While the cash accounting, already explained by my classmate, only registers the
transactions when the payment occurs.

For example, let’s supposed that the company “Etincelle” is dedicated to buying and selling
makeup. In that way, they buy merchandising valued at $1.000.000.- on 20 th November, 2021
which is going to be paid in January, 2022.

According to the application of accrual principle, the purchase is going to be registered in 2021
that is when effectively it took place regardless that the payment takes place the next year.

Seeing from this example, the date in which the accounting entry is going to be made is November
2021. Therefore, it will affect the result of that year because the company will have a bill to pay for
$1.000.000.

date Detail Amount debited Amount credited

20th November Compra mercadería $1.000.000
2021
Cuenta por pagar $1.000.000

It is important to consider accrual accounting because companies receive immediate information

about their outcomes and incomes. In this way, it is easier to organize and manage their current
resources and plan their future actions.

In other words, it gives a more precise image of the situation of a company.

That was our presentation about state of result, cash accounting and accrual accounting. Thanks
for your attention.