ABSTRACT
The accrual basis of accounting is used in preparing external financial statements for general purposes. Under this assumption, the effects of all transactions and other events are recognized in the accounting records when they occur, rather than when cash or its equivalent is received or paid. When ledger accounts are pure, the information required by a firm can directly be extracted from the ledger accounts when the closing balance sheet and the profit and loss account are prepared. The counterpart of the pure account is the mixed account. An account is mixed when amounts regarding the profit and loss account as well as the balance sheet are found on the same ledger account. Amounts paid in advance are amounts that have been booked as a payment in a certain period, but which relate to and are there for matched to a later period.
