What is full accrual in SAP PSM - Public Sector Management?

SAP Term: full accrual

• Component: PSM

• Component Name: Public Sector Management

• Description: A basis of accounting requiring that all financial transactions with economic value be reported in the same way as corporations report them. Examples of full accrual transactions that are different than modified accrual transactions include the following: Long-term assets are depreciated over their useful life, with the assets and accumulated depreciation reported on the balance sheet. Long-term liabilities are included on the balance sheet, with premium or discount on long-term debt deferred and amortized over the life of the debt issuance. Payments of long-term liabilities reduce the balances reported on the balance sheet. Investments are adjusted to reflect their market value. Non-current revenues and expenses are included in the calculation of net income and carried forward into retained earnings. Retained earnings are not reserved for encumbrances and inventory.

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• Key Concepts: 
  Full accrual is a method of accounting used in SAP Public Sector Management (PSM) that records all financial transactions in the period in which they occur, regardless of when the cash is received or paid. This method of accounting is based on the accrual principle, which states that revenue and expenses should be recorded when they are earned or incurred, rather than when cash is exchanged. 
  
  How to use it: 
  In SAP PSM, full accrual accounting is used to record all financial transactions in the period in which they occur. This includes recording revenue when it is earned and expenses when they are incurred, regardless of when cash is exchanged. This allows for a more accurate representation of a company's financial position at any given time. 
  
  Tips & Tricks: 
  When using full accrual accounting in SAP PSM, it is important to ensure that all transactions are recorded accurately and in a timely manner. This will help to ensure that the financial statements accurately reflect the company's financial position at any given time. 
  
  Related Information: 
  Full accrual accounting is just one of many methods of accounting used in SAP PSM. Other methods include cash basis accounting, modified accrual accounting, and hybrid accounting. Each method has its own advantages and disadvantages, so it is important to understand which method best suits your company's needs before implementing it.