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IN TAX AND ZAKAT ACCOUNTING Under the Accrual Method, income is reported when it satisfies some...

IN TAX AND ZAKAT ACCOUNTING

Under the Accrual Method, income is reported when it satisfies some tests. What are these test? Discuss.

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Answer #1

Under the Accrual Method, income is reported when it satisfies:-

• Revenue becomes earned when a company's goods or services have been shipped or performed, and when there is confidence that the buyer will make payment for those goods or services. If both of these criteria are met, the company can record its revenue in the period in which it delivered the good or service.

• Under the accrual basis of accounting, revenues are reported on the income statement when they are earned.

• which often occurs before the cash is received from the customers.

• The reason is that the income statement prepared under the accrual basis will report all of the revenues actually earned during the period.

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