1 Reply Latest reply on Oct 17, 2008 3:40 PM by 456359

    Accrual and Encumbrance

    656069
      Hi All

      can anyone expaline me abt Accrual and Encumbrance little more

      thanks in advance

      ani
        • 1. Re: Accrual and Encumbrance
          456359
          Encumbrance is concept of fund reservation at every stage of your business flow. For example: When you raise a PO the fund will be reserved for the PO account. Now when you receive an invoice for this PO. The PO fund will be unreserved and a reservation entry will be made for the invoice enc account.

          Accrual is an accounting practise which says that "Your revenue and expenses should be recognized in the same period". This gives a better/truer picture of how the business is doing and is followed widely.