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According to me, Accrual concept and Prudence concept are somehow contradicting each other.
Like Accrual concept says that record Income when it is done. We do not wait for cash.
While Prudence concept says that we do record foreseeable expense or losses. We do not record income or profit until cash received.
Am I correct?They do not really contradict.
Certainly we record income when it has been earned, and if the cash has not been received we have a receivable. That is under the accruals concept.
However, if we then foresee that we will not or might not receive the money we then record it as an irrecoverable debt or create an allowance for a doubtful debt. This is application of the prudence concept.
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