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Suppose the management cant understand the Accruel nature of Business & they ask where is the money that you showed in Profit & Loss Statement...
Good Question Khalid Brother, Same question asked from my my directors and then i said to them that some from the profit and loss statement some money has been received and utilized and some money in the market. If you will close the business at this time then you can see how much money you can recoverable from your net debtors or net customers.
If a certain revenue is due to the services provided for the period, we can make accrual of such revenue and can claim from the Client. Because we have already have expenses for such services during that period, like Salaries or other expenses. So there is a logic for accruing the revenue as well.
