Explain the recognition criteria for revenue, expenditure, non-current assets, and depreciation under the accrual basis of accounting.

Here's how the following elements of financial statements are recognized using the accrual basis of accounting:

• Revenue: Revenue is recognized when it is earned, meaning when goods or services have been delivered or performed, and the entity has a right to receive payment, regardless of when cash is actually received.
• Expenditure: Expenditure (or expense) is recognized when it is incurred, meaning when goods or services have been consumed or utilized to generate revenue, regardless of when cash is actually paid. This aligns with the matching principle.
• Non-current Asset: A non-current asset is recognized when it is acquired and meets the definition of an asset (future economic benefits are probable, and its cost can be reliably measured). It is initially recorded at its cost.
• Notion of depreciation: Depreciation is the systematic allocation of the cost of a tangible non-current asset over its useful life. It is recognized as an expense in the income statement to match the cost of using the asset with the revenue it helps generate during an accounting period.