The accrual basis, except for cash flow information

Learning objectives

• Explain the accrual basis of accounting and the exception for the statement of cash flows.L1
• Identify, in a list of statements, the one that is not prepared on the accrual basis.L1

Normative references

• IAS 1 §27Except for cash flow information, an entity prepares its financial statements using the accrual basis of accounting.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Which of the statements in a complete set of financial statements is not prepared on the accrual basis of accounting?L1
• Under IAS 1, an entity recognises its income in the statement of profit or loss when it receives the cash, the cash basis applying to all of the financial statements.L1
• Orion SA closes its books on 31 December 2026. It delivered goods in December 2026 (the income is earned in 2026 under the standard that governs it, case fact) and will collect the invoice only in February 2027. An analyst summarises the treatment; which of her sentences is wrong?L1