What are accruals? How much control do managers have over accruals?

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What are accruals? How much control do managers have over accruals?

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What are accruals? How much control do managers have over accruals?

Explanation & AnswerSolution by a verified expert

Explanation

Accrual refers to a type of  to any expenses that have been incurred but not yet recorded in the books of accounts. The company needs to adjust the accruals before the issue of financial statements. They automatically increase with an increase in operations of the firm.
 
Firms do not have any control over accruals because the timing of the accruals are dependent on the industry norms, economic forces, and tax payment dates set by law.

Verified Answer

Accruals refer to a type of outstanding expense that the company needs to pay before the preparation of financial statements. These expenses include wages and salaries of workers and employees.
 
The occurrence of the accruals are dependent on many external factors; hence, firms have no control over them.

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