Accrual Basis of Accounting

The accrual basis matches revenues with the expenses incurred to earn them in the same period. It gives rise to items such as accrued income (earned but not yet received), outstanding expenses (incurred but not yet paid), prepaid expenses and income received in advance.

The alternative, the cash basis, records items only when cash moves. It is simpler but can misstate performance for a period. Financial statements under NFRS (except the cash flow statement) are prepared on the accrual basis.

Banks apply the accrual basis to interest. Interest on performing loans is accrued and recognised as income using the effective interest rate. However, recognising interest that is unlikely to be collected would overstate profit, so NRB guidelines restrict recognition of interest on non-performing loans and require accrued interest receivable beyond certain limits to be set aside in a regulatory reserve rather than distributed. This is a key point where prudence modifies the pure accrual principle in banking.

प्रोदभावी आधारले सोही अवधिमा आम्दानी र त्यो आम्दानी आर्जन गर्न भएको खर्च मिलान गर्छ। यसबाट प्राप्त हुन बाँकी आम्दानी, भुक्तानी बाँकी खर्च, अग्रिम भुक्तानी खर्च र अग्रिम प्राप्त आम्दानी जस्ता शीर्षक बन्छन्। नगद आधारमा नगद आउँदा-जाँदा मात्र लेखाङ्कन हुन्छ।

NFRS अनुसार नगद प्रवाह विवरण बाहेक वित्तीय विवरण प्रोदभावी आधारमा बनाइन्छ। बैंकले असल कर्जाको ब्याज प्रोदभावी रूपमा आम्दानी जनाउँछ, तर निष्क्रिय कर्जाको ब्याज आम्दानी जनाउन नेपाल राष्ट्र बैंकको मार्गदर्शनले सीमित गर्छ र प्राप्त हुन बाँकी ब्याजको केही अंश नियामकीय जगेडामा राख्नुपर्छ।