Intjäningsprincipen

The accrual basis of accounting, known in Swedish as intjäningsprincipen, is a fundamental accounting principle that dictates when revenue and expenses are recognized. Under intjäningsprincipen, revenue is recorded when it is earned, regardless of when the cash is actually received. Similarly, expenses are recognized when they are incurred, irrespective of when the payment is made. This contrasts with the cash basis of accounting, where transactions are recorded only when cash changes hands.

The primary goal of intjäningsprincipen is to provide a more accurate picture of a company's financial performance and position over a specific period. By matching revenues with the expenses incurred to generate them, it allows for a better understanding of profitability. For example, if a company provides a service in December but doesn't receive payment until January, the revenue is recognized in December because that is when the service was rendered and the revenue was earned. Likewise, if a company receives a bill for services used in December but pays it in January, the expense is recognized in December.

Intjäningsprincipen is mandated by accounting standards such as generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) for most businesses. Its application ensures that financial statements reflect the economic reality of transactions rather than simply the movement of cash. This principle is crucial for stakeholders, including investors, creditors, and management, to make informed decisions based on a comprehensive view of the company's operations.