Question

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Answer 1

Accruals and repayments are essential concepts in finance and accounting, each playing a distinct role in reflecting financial activities and obligations.

Accruals involve recognizing revenues or expenses in financial statements before the corresponding cash transactions occur. This accounting method ensures that economic events are matched with the period in which they are earned or incurred, providing a more accurate depiction of a company's financial performance. For instance, if a service is provided in one accounting period but payment is received in the subsequent period, the revenue is accrued in the period of service delivery.

Repayments, on the other hand, center around the return of borrowed funds or the settlement of financial obligations. This can apply to various financial instruments, such as loans or bonds. Repayments may involve regular periodic payments, each covering a portion of both principal and interest, or a lump-sum settlement. Monitoring repayments is crucial for assessing a company's cash flow, managing debt, and ensuring financial stability.