Mercantile system of accounting: Meaning and Definition

What does mercantile system of accounting mean?

Mercantile system of accounting is another name for Accrual Accounting. Recording revenue when you earn it and expenses when you incur them - not when cash moves. The accounting standard every Indian company must follow.

The two names mean the same thing. You will see "mercantile system of accounting" in some ledgers, reports and contracts and "Accrual Accounting" in others. The full entry covers how it works, with examples.

Read the full definition of Accrual Accounting

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From the glossary

Related terms.

Financial reporting Accrual Accounting Recording revenue when you earn it and expenses when you incur them - not when cash moves. The accounting standard every Indian company must follow. Also called accrual basis of accounting, accrual method, mercantile system of accounting Financial reporting Amortization Spreading the cost of intangible assets (patents, software, licences) over the years they generate value - depreciation's less-talked-about sibling. Also called amortisation Financial reporting Asset Depreciation Writing down the value of machines, vehicles, and buildings over their useful life - with two different rule books for accounting and tax. Also called depreciation, fixed asset depreciation, depreciation of assets Financial reporting Balance Sheet A financial statement that presents a company's total assets, liabilities, and shareholders' equity at a specific point in time. Also called statement of financial position, statement of assets and liabilities Audit and controls Financial Audit An independent examination of a company's financial statements to provide assurance on their accuracy and true and fair view. Also called statutory audit, audit of financial statements, external audit Due dates and calendars Financial Year (FY) The 12-month accounting period from April 1 to March 31 used for tax filings, financial reporting, and statutory compliance in India. Also called accounting year, tax year

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