Type of RAP | Should | Have | Impact on profit
Active | Expenditure account (e.g. rent) ARAP | (to) Bank | Mitigation
Passive | Bank | (to) income account (such as rental payments) PRAP | Increase
Type of RAP | Should | Have | Impact on profit
Active | Expenditure Account | (to) ARAP | Reduction
Passive | PRAP | (to) income account | Increase
German commercial law knows the principle of accrual-based profit determination. Efforts and earnings should always have an impact in the calendar year to which they actually belong economically. If there is now an inflow or outflow outside the correct profit determination period, the correct allocation must be established via a so-called accruals account (RAP).
The accrual-based profit determination results from § 252 paragraph 1 no. 5 HGB, whereby the norm about § 5 paragraph 1 sentence 1 EStG also applies to the tax assessment of a situation. Expenditure and income of a financial year, irrespective of the actual payment (account or cash movement), must therefore only be taken into account in the end of the financial year to which they actually belong.
Examples:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.