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Dear John,
Please can you explain accrual basis and prudence concept. I shall be grateful.Why have you not watched the free lecture on accounting conventions and policies? Both of these concepts are explained there!
The accruals basis is that we should bring in all income earned and expenses incurred during the period (i.e. not simply cash received and cash paid) and that we should match costs with revenues (e.g. depreciate so as to match the cost of an asset against the revenue earned from the asset).
Prudence means caution. We should only account for profits when they are certain (have been realised) but we should account for losses as soon as they are identified.
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