... the products yet. Lately, the customer paid in the third year. According to the accrual accounting, we should record the revenue when the transaction has incurred that is the second year. In the first year, though the entity had prepared for the transaction, but the transaction had not taken place until the second year. However, the entity can not actually realize its revenue in the second year because the customer had not paid until the third year, but in the second year, the entity delivered its products so we should record the revenue in the second year. At the same time, the expense of the producing such as the purchase of raw material and the cost of transportation also should be recorded as expense in the second year in order to match the matching principle. Merits and weaknesses As every coin has two sides, accrual accounting has its own advantage ...

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