When a company shares its balance sheet, it must include not only current expenses but known future expenses as well. While these both affect the bottom line, an accountant must report them differently. What are the differences between accruals and payables?
With these thoughts in mind:
Write least 200 words answering the following questions:
Discuss the fundamental differences between accruals and payables. In the course of your Discussion, please include the types of expenses that might be categorized as either an accrual or a payable.
Given the possible differences in accruals and payables, discuss potential implications that may arise in the financial presentation of a company. Is one method preferable or more accurate than the other?
Are accruals and/or payables subject to adjustments and, if so, when should these adjustments happen?
What ethical considerations surround the issue of accrual calculations and the impact they may have on the financial presentation of a company?