Hie Preetham, In the accrual accounting method, the revenue is recognized on the day it is earned and the expenses are recorded on the date they are incurred. The recognition of revenue and expenses is not concerned with the dates of actual cash flows. If your business has only cash transactions both cash basis and accrual basis accounting will produce the same results. However, if you do some transactions on credit, as in most business, the results will vary. Both IFRS and GAAP mandate the use of accrual method for recording all revenue and expenses.
The requirement on the use of accrual accounting is set out in IAS 1 Presentation of Financial Statements para 27. It is perhaps good to note that IAS 1 in general addresses the layout of financial statements as a whole while the other standards deal with specific items or components of financial statements which might help in adressing similar question in the future. For more video classes visit www.cakart.in for availing discount use coupon code: CAKARTAMB1671782