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The Polestar Precept EV is ready to embrace what other cars hide

A world in the grip of coronavirus lockdown probably isn’t the easiest time to reveal an aspirational luxury concept EV like the Polestar Precept, much less to bring a mass-market electric car to market. That, though, is the situation in which the automaker finds itself in 2023. Were it not for COVID-19, the striking Precept concept would have been fighting for headlines at the Geneva Motor Show.

Instead, with the car show canceled, the automaker finds itself bucking industry trends, starting up Polestar 2 production in China while its peers are idling their factories around the world.

“Today there are so many more important questions and topics than show cars or glamorous industry get-togethers,” Thomas Ingenlath, CEO of Polestar says. “We do not want to pretend that we can just quickly get back to normal: play “The Show Must Go On.” But, since we are all locked in the situation of social isolation; spending lots of time at home, lots of time online in front of the screens, we thought we could bring a bit of entertainment, infotainment, and as well food for thought about a different kind of sustainable future.”

You could argue it’s terrible timing for Precept, but Polestar Head of Design Maximilian Missoni isn’t willing to concede defeat. I caught up with Missoni as Precept prepares to make its big splash digitally, to talk about why the concept is so important in helping distinguish Polestar from Volvo and Geely, how luxury has a new language in the electric era, and why privacy might prove to be one of the biggest barriers to autonomous driving.

The following interview has been edited for clarity and length.Precept is probably closest in category to a sports sedan, yet the growth in the auto industry right now is typically SUVs and utility vehicles. Is the concept wishful thinking, and how can its themes translate to more retail-friendly categories?

“I mean, the question of why is it not an SUV, or why are you doing this rather than an SUV, I get that. It’s quite a US question to get. Of course there’s a big trend toward SUVs, and our next car – the Polestar 3 – is going to be an SUV.

But I don’t think that this style of body style is dead in any way. Okay, the Precept is extremely sleek and “fastback” – but for a concept car that is kind of what you are expected to do!”

Precept both embraces some traditional “luxury” and “sports” cues, like the big wheels, but also intentionally sets some others aside. How does electrification enable that transition, particularly in the luxury segment where many buyers are fairly conservative?

“You know, the whole electrification journey, the journey towards sustainability is a big push from everybody. Now, it seems like everybody at the same time goes, “oh, wow, we’re really gonna do something” and it makes total sense. And it is good that it’s happening. And then all the technologies that we’re getting, that at first designers were like, “oh, damn, now we have to hide, you know, a sensor and the radar. And then there’s LIDAR as well.”

So we started to try to sweep them under the carpet as long as we could. And I think now is the time that we as designers – and with Polestar we have that chance – because there’s basically a white, blank sheet of paper at this point, more or less. Where we can say, look, okay, we could just apply the same things as we always have: do some chrome strips, and some leather interiors, and some nice wooden panels. And then everybody would understand “that’s premium” because that’s what I’ve learned since I was a child. That’s what “premium” means.

And then we hide all the sensors and then we hide all the sustainable stuff, under a nice leather dashboard. But we said no, we do the opposite. We try to use those ideas and those changes in society and use them as an inspiration for the team. So let’s celebrate the radars and LIDARs and ultrasonics; let’s celebrate the 3D knitting and the flax-based composite materials. And, you know, I think if we wouldn’t have done that, it would have been a bit of a waste of a new brand.

Because you’re just doing what you’ve always done with a new logo. And then, you know, of course, you tick the boxes and make it more sustainable and try at least, but we really turned that into something new. And that’s why I’m so keen for you and for people to see Precept live, because it really looks premium and luxurious, even though it doesn’t play any of the tricks that the classical luxury cars do.”

At the moment it seems every new EV is judged by range and speed – how does Polestar reset those criteria, or does it even need to?

“Well I think that some of these criteria they are important. I mean, we shouldn’t kid ourselves: range is important, and 0 to 60 you can debate how important is it in everyday life. But it’s definitely important to have a well-performing powertrain and Polestar is quite keen on delivering on driving dynamics as well, not just a straight line.

So Polestar really puts a lot of emphasis on the everyday driving dynamics. I think these are boxes to tick and Polestar will tick those boxes. But what we want – that’s because of the combination of Thomas [Ingenlath] and me having worked together for a long time – we really want to establish that brand that is also you know, stepping up and creating a new normal in terms of design. So shifting the paradigm when it comes to car design.”

Obviously we’re living in strange times right now. I don’t want to talk about coronavirus specifically, but I do think we’re at a potential pivot point where suddenly working remotely, or specifically from home, is more available to people as an option they might not have had before. How do you see that affecting transportation, and the demands we place on vehicles?

“I think when we get through this we will, to a large extent, revert to our normal life as we as social beings are used to. I think that flying all over the globe all the time, just to have a meeting somewhere in China… I think this feels already quite strange, you know? I mean, we’ve been quite cautious at Polestar because we’re an electric brand, we focus on sustainability. Everybody had to check their footprint and we ask ourselves a lot, how much do we need to travel?

But I think the car, if it’s done and designed and built in as sustainable way as possible, I think the car as this safe space for yourself, is actually – in big cities, for example – is maybe even seeing a renaissance. The car is one of the few spaces where nothing has changed: you can still behave the way you’ve always behaved, because you’re on your own or with your family. So I don’t know if [coronavirus] will have such a massive impact on cars, I don’t share that view. But it will definitely influence society.”

The idea of the car as a luxury space by virtue of its isolation is an interesting one, because it suddenly puts the emphasis on the quality of the interior space, not the exterior. How does that change your focus as a designer?

“First of all, form factor-wise I think electrification is a lot about range. And you can discuss now if people are just not used to living with electric cars, so they’re more worried about the range: the range anxiety is bigger than the actual problem. But it is all about range, so aerodynamics plays a big role, the sleek silhouette is still is still quite relevant. And I experience it from my day-to-day work: aerodynamics and the issue of making cars work really well aerodynamically is becoming bigger and bigger.

But you’re right and the inside of the car, that becomes more and more – for two reasons – an important topic. The main reason would probably be the the journey towards autonomous driving. If we we change zones in cities or whatever, where the car is entirely autonomous – and only autonomous cars – then the whole design can change radically. People always ask me how big electrification influences the design of cars? And it’s actually not that great because many things like safety – active safety, passive safety – is pretty similar.

But I mean, that part is not changing so much. So the parts that you need for impact, and safety, and all the regulations that come with a driver having to be able to see and control. But once you take that out of the equation, body styles are a completely new story.

But there is another aspect that I think is quite interesting about privacy in cars. The car being one of the last places where it’s becoming so luxurious because it’s your private space. When we talk about autonomous driving, we sometimes forget that all the providers of ride-hailing or these systems, they need to monitor what’s going on. At any point in time, they need to be able to press a button and see what’s happening in their vehicles. So you will never be private, fully. Privacy will actually become a big luxury, which you can only have in your own cars.

You know, in your private vehicle. So people say “will the big rollout of autonomous driving, will that replace your private car?” Because you get from A to B and it’s quite cost-efficient. But what you’re never going to have is privacy anymore. You can never have a conversation that you want to have. You can never, I don’t know, pick your nose! So this is becoming a completely new type of luxury.”

That may be true, but Precept has its fair share of sensors inside the cabin, too. We’re generally seeing a shift from the expectation that the car’s sensors will be outside, facing out, to the idea that there’ll be more inside, watching us.

“I think we are always looking at how to integrate technology into a car. And I think that comes from the Volvo world, because Volvo is very much the brand that wants to support the driver but not push itself into the foreground. You know, it’s very much in the background, making sure that you have everything you need. It’s a very Scandinavian concept.

Polestar is much more about showing off technology. So maybe the technologies that are being used are the same, and coming from the same research. The joint research of the brands. But Polestar is really communicating in terms of design, look, that this is an eye-tracking sensor. It’s not hidden somewhere behind the surface. It’s like, “look, I’m an eye tracking unit and I’m extremely complex and cool!” And I think that’s the first stage of adopting technology, showing it off, and then there’s a second stage of hiding it away behind the surfaces and so on.”

How did you prioritize what to include in Precept, so as not to end up with a list of features so long that the whole concept just turns into a flight of fancy?

“One point is always to create a minimalistic and an easy to understand environment, which you then reveal layer by layer. I think that’s our job as designers, that’s really where we come in, because if you ask the engineers, they like to have as many systems and as many things as possible on the first layer. And we have to say, look, it has to first be calm and serene, and then if you want, you can engage with something and then that creates interest. But if you don’t want it, it’s not there.

So this kind of hierarchy of systems, that is something that that we are always trying to keep under control. It’s this minimalistic design expression that we want, but then everything is there when you need it.

The eye-tracking was an interesting example because we discussed it a lot with our engineers: how can you benefit from it? The first idea would be, well, you make it bigger when you look at it, right? I mean, things become bigger. But actually the opposite is the case.

So when you don’t look at it, you need it fairly big so you don’t have to look at it, you still can read the number in the periphery of your field of view. But when you actually look at it, it doesn’t help if it’s big because you can see it anyway! So it shrinks down, adds more; it shrinks and adds more in-depth information. You know, that’s what I’m saying with layers: then the layers pop up when you look at it, for that fraction of second that you look at it, you get the information that you might want. But when you look away, you don’t want all this text that tells you “look at me look like me.” You want it to be as big and as simple as possible. Sometimes it’s the opposite of what you think that happens when you apply a certain sensor system.”

One last question – and I know you can’t talk about unannounced products – but out of everything in the Precept concept, what are you most excited about coming to future production Polestar vehicles?

“Many of the features that we brought into the concept, we are going to see in some shape or form in future production cars. But I would say the most exciting thing is – and it’s not just a feature – the most exciting thing is that with Precept we’ve made clear that we, as a brand, Polestar is here to stay.

Polestar is not a spin-off or add-on to Volvo. Polestar is a completely unique performance electric brand. Maybe it sounds trivial, but for a designer and for the team, to get this kind of emancipation, to get that step right for people to say “yes, it’s a unique design, it’s feels right as a concept in its own right.” That’s a big step.

We just made that step, and we’re just now exchanging feedback on this. So far, I think, the feedback was very good. People understand that it’s still part of the group, but it’s its own character. And, you know how many different expressions are out there: it’s an industry on steroids! So it’s quite a big step for us, so that’s definitely the most exciting thing.”

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Google And Polestar Give Apps The Keys To The Android Dashboard

Google and Polestar give apps the keys to the Android dashboard

Google is opening up Android Automotive OS, the dashboard-centric version of its mobile platform which will launch first on the Polestar 2 EV, to third-party media apps. Set to go live at Google I/O 2023, the company’s annual developer event being held next week, the new dev tools are the first of a number of ways Google plans to bring new apps to infotainment systems.

Android Automotive OS was announced back in 2023, expanding Google’s reach to car dashboards. While Android Auto has long allowed phones to project a customized version of their interface onto vehicle infotainment systems, offering access to navigation, multimedia, calls, messaging, and the Assistant, Android Automotive OS goes far deeper.

The timescales of the auto industry are a little different to those of the phone world, however, and so it’s only now that we’re beginning to see the first fruits of Android Automotive OS. Polestar 2 – the all-electric car from the new Volvo and Geely-backed Swedish automaker – will use the software for its whole infotainment system, as we saw when the EV debuted at the Geneva Motor Show 2023 in March. It’s an interface both new and familiar.

Control is via a large, 11-inch portrait orientation touchscreen in the center console, that resembles a propped-up Android tablet. That has a modular UI with different panes for multimedia, communication, navigation, and managing the Polestar 2’s electric drivetrain. Say “Hey Google,” and the Assistant can control vehicle features as well as answer questions.

The promise, though, has always been broader than just what Google and the automakers cook up between themselves. With access to the Google Play store, Android Automotive OS puts expansion to the fore, and now Google is talking about just what sort of apps will be possible. As you might expect, given the potential for driver distraction, it’s a slightly different path than developing for an Android phone.

So, Google is using the Android Auto framework as its basis. That has features like a consistent user interface to reduce confusion while on the move, rather than serving up different UIs per each different app. It also better handles different screen sizes and input methods, which can also vary on a per-car basis.

Initially, it’ll be media apps that Google is embracing. Developers will be able to build those apps – for music and podcasts – from Google I/O. Beyond that, the company will open things up to navigation and communication apps, along with other categories.

The actual user-base for such software will be fairly limited at first, of course. After all, the Polestar 2 is going to be a relatively niche model, taking on the Tesla Model 3 when it goes on sale later this year. However with Audi vehicles joining the party too, along with other automakers like Fiat Chrysler Automobiles announcing that they, too, will be using Android for their next-generation infotainment systems, the footprint should expand fairly rapidly.

We’ll hear more about Google’s plans next week, at I/O 2023. The Polestar 2, meanwhile, makes its US debut today.

The Embrace, A Monument Celebrating Mlk, To Be Unveiled On Boston Common

The Embrace, a Monument Celebrating MLK, to Be Unveiled on Boston Common

Passers-by get a firsthand glimpse of The Embrace, the 22-foot-high bronze memorial to Martin Luther King, Jr. and his wife, Coretta Scott King, in the Boston Common, January 10. The sculpture, consisting of four intertwined arms, was inspired by a photo of the Kings embracing after MLK learned he had won the Nobel Peace Prize in 1964. The statue is to be unveiled during ceremonies Friday, January 13. (AP Photo/Steven Senne)

Martin Luther King, Jr.

The Embrace, a Monument Celebrating MLK, to Be Unveiled on Boston Common The 22-foot-tall bronze sculpture of interlocking arms that commemorates Martin Luther King, Jr. (GRS’55, Hon.’59) and wife Coretta Scott King—who met while King was a student at Boston University—will be unveiled on Friday

Boston Common, the country’s oldest public park, has been home to many embraces during its nearly 400-year history: friends meeting up for an afternoon picnic on the grass, couples getting engaged under the lush trees, protestors gathering in support of a cause. 

But on Friday, the 50-acre Common will welcome its most significant—and largest—embrace yet. The Embrace, a 22-foot-tall bronze sculpture of four interlocking arms memorializing Martin Luther King, Jr. (GRS’55, Hon.’59) and his wife, Coretta Scott King, will be unveiled at an afternoon ceremony that’s open to the public. 

The sculpture encapsulates an embrace between the husband and wife after King’s Nobel Peace Prize win in 1964. Hank Willis Thomas, the artist who designed it, told the Boston Globe that he was moved by the intimacy of the couple’s private relationship as much as the power of their public personas. 

Thomas’ design was chosen from among five finalists in a competition hosted by Embrace Boston (formerly King Boston) in 2023. The nonprofit organization, which continues King’s work of dismantling structural racism in Boston and beyond, oversaw the construction of the sculpture.

“It’s deeply significant that America’s oldest public park is installing a public monument that is a celebration of the profound role that our city played in the lives of Martin Luther King, Jr. and Coretta Scott King,” says Keith Mahoney, vice president of communications and public affairs at The Boston Foundation, which partnered with Embrace Boston.

“The work of Embrace Boston will continue after this, and its commitment to equity and to breathing life into a monument that’s a celebration of love is extremely hopeful and represents the dawn of an era of hope for our beloved city,” Mahoney says. 

The partnership between the two civil rights activists was forged while they were both students in Boston. King, studying philosophy and ethics at Boston University, went on a date with a young Coretta Scott, who was studying opera at the nearby New England Conservatory of Music. They married in 1953, went on to have four children, and Scott King carried on her husband’s legacy of racial justice activism for nearly 40 years after his 1968 assassination, until her death in 2006.

In acknowledging the role BU played in King’s life, and the profound effect King had in Boston, the University pledged $250,000 toward the construction. In a speech to announce the contribution, BU President Robert A. Brown said that the donation would “ensure that future generations of Bostonians and visitors will appreciate Martin Luther King’s extraordinary legacy and what his years in Boston meant to him, to Mrs. King, and to all of us.” 

The unveiling event on Friday, January 13, will be held on the Boston Common from 1 to 3 pm, and will feature remarks by members of the King family and other elected, civic, and religious leaders. Members of the public can view the event on large screens positioned near the Parkman Bandstand, where a DJ will perform and hot refreshments will be available. The event will also be streamed live on NBC10 Boston. The monument itself opens to the public in early February, once the final construction fencing has been taken down. 

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Americans Are Ready To Return To The Office – Just Not Full Time

With a widespread vaccination program taking effect, life is edging back to pre-pandemic normality. Also on its way back? The daily commute back to the office. According to a recent survey, most of us are more than ready to get back to work in person.

While attitudes towards returning to the office varies by country, there’s a real passion from Americans to return to chatting at the water cooler and having meetings face-to-face again. But, does anyone still want to do this for five days in a row?

In a week where Apple has announced that it expects its staff to work in the office three days a week, what is the sweet spot for the modern office worker?

Back to the Office (Some of the Time)

The survey, from Randstad North America, was conducted by interviewing 800 participants per market, focusing on those who work at least 24 hours per week.

Anyone who has become accustomed to their remote working lifestyle may be surprised to hear that an overwhelming number of American office workers do want to get back – some 78%, in fact. That breaks down further as 76% of women wanting to return, versus 81% of men.

78% of office workers want to return to work; but, 54% wish to do so under flexible arrangements

However, there’s a slight caveat attached to this, in that we’re not quite  ready to give up our home comforts entirely just yet.

A slim majority (54%) of those polled said that they preferred a flexible work arrangement that allows them to spread their time between home and the office. It was also the reason that 23% of respondents gave for switching jobs during the pandemic.

23% of respondents switched jobs during the pandemic in order to seek flexible working guarantees

The survey through up some more interesting statistics too. While job satisfaction has fluctuated slightly from pre-pandemic to today, the change has been very slight.

Americans interviewed in Q4 2023 stated a 77% level of job satisfaction. While this dipped in Q2 2023 (72%) and gained in Q4 2023 (79%), it’s now back at 77% again.

Similarly, 30% of those interviewed in Q4 2023 were actively looking for a new job. In Q2 2023, it was 30%, again.

The Highs and Lows of Working from Home

While some of us may have revelled in the chance to work in our pyjamas and gossip with the cat about our colleagues, this wasn’t felt by everyone.

According to the survey, the most negatively affected group were younger workers. The 18 – 24 age group had the highest percentage of those who felt lonely, with more than a third reporting feeling this way.

The study from Randstad points out that the mental health repercussions of this could be serious, with not just productivity at stake, but the well being of the younger employees themselves. Japan’s government has even appointed a ‘minister of loneliness’ to tackle this issue, after the country saw suicide rates rise for the first time in eleven years.

The main reason given for struggling to work at home was due to missing colleagues. After over a year of the closest human interaction being a pixelated Zoom call, it’s easy for most of us to relate to that sentiment.

Around 32% of respondents said they found it difficult to keep a work/life balance. With the ritual of the commute to the office and the physical separation now gone, where does the living room end and your office begin? Extended working hours were also raised as an issue, with virtual working encouraging a culture of being ‘always available’.

In fact, one of the most common asks from employees to their employer was policies on work hours to enable them to keep a work/life balance (27%).

Google Pixel: What Makes It Better Than Other Android Smartphones

Google recently announced its Pixel smartphones, the Pixel & Pixel XL and these are not your usual Nexus smartphones, these are phones “made by Google”. The new devices feature top of the line hardware but that’s part of every Android flagship, right? Well, thankfully, Google differentiates the Pixel line-up with some very cool unique features. However, the Pixel starts at $649, which is quite pricey and you must have wondered if the price is justified, considering there are a number of high-end Android smartphones you can buy. Well, let’s put our dilemmas to an end and check out the unique features in Google Pixel and what exactly makes it better than other Android smartphones. So, let’s begin!

1. Google Assistant

While we saw a preview of Google Assistant in the instant messaging app Allo, the Google Assistant in Pixel is what we have always imagined Google’s virtual assistant to be, and more. Google Assistant brings you all the goodness of Google Now in a much more user friendly and conversational manner. The voice assistant can bring you daily briefings, weather info, flight status, play music, make reservations, send messages, answer your queries, set reminders & alarms, enable or disable system options and a lot more. Plus, it has got a personality, similar to what you get in Siri or Cortana and you can even play games with it.

With third party apps supporting the Assistant, it’s bound to get better. While Google Assistant should make its way to more Android devices, if you just cannot wait, you can get it on your Nougat running rooted device. If you are using it already, you should definitely check out our list of cool Google Assistant tricks.

2. Pixel Launcher

It also includes a cool new wallpaper picker but it’s not really exclusive, as you can get it from Play Store. Chances are, Pixel Launcher will remain exclusive to the Pixel devices but if you really want it on your device, you can install the APK file of the launcher. However, do keep in mind that it might not play well with your device.

3. Google Camera

The cameras on the Pixel smartphones are pretty amazing and Google has updated the Google Camera app to make sure you get the best experience on the Pixel. The updated camera app brings a new UI, with the timer, HDR, grid and flash options available right from the viewfinder. Also, there’s a hamburger menu, which lets you jump to various modes like slow motion, panorama, lens blur etc.

With the new camera app, you can press hold on the viewfinder to trigger AE/AF lock and there’s also a manual exposure slider in tow, which should come in really handy. Along with that, there are new cool transitions when you switch between the front and rear camera and when an HDR photo is processing. Last but not the least, the new camera app also lets you set the volume keys to act as shutter or for zooming.

4. Google Support

Google is trying to match Apple’s iPhone support with its own in the Pixel smartphones. The Pixel comes with a new “Support” tab in the Settings page, which lets you chat or call a Google representative for help. While the chat option works like a usual messaging chat, a representative can send you a screen share request in the phone option to understand your query better. The Support page also lets you search help topics, check out tips & tricks and send feedback to Google. Overall, this is a pretty nice addition by Google and we hope this feature comes to more Android smartphones.

5. Unlimited Backup at original quality

Google lets you backup unlimited photos at original quality on the Pixel smartphones and it’s a big deal. If you are using Google Photos on your Android device, Google lets you backup unlimited photos but only in High Quality (1080p videos and 16 MP photos) and if you want to backup full resolution photos, it’ll take up your Google Drive storage. While the backed up High Quality photos look almost the same as the photos you took, they surely go under some compression. However, if you own a Pixel, there’s nothing to worry about, as the photos and videos will be backed up in their original size and quality in Google Photos. Also, with Pixel not packing expandable storage, this is certainly appreciable.

6. Smart Storage

To tackle the non expandable storage in the Pixel, Google has introduced another cool new feature dubbed “Smart Storage”. The feature automatically removes photos and videos that are backed up in Google Photos and are 30, 60 or 90 days old. This feature automatically works when your storage is almost full.

7. Android 7.1

As expected, the Google Pixel and Pixel XL are the first smartphones to come with Android 7.1, so it’s another added incentive to get the smartphone. Android 7.1 brings some cool changes like rounded icons, new power menu, GIF support in Google Keyboard, new calling UI and more.

It also includes the cool new app shortcuts, which is very similar to shortcuts offered on iOS app icons with 3D Touch. On Android 7.1, you can just press hold on an icon to get various shortcuts and you can even create homescreen icons for these shortcuts to quickly access them. For instance, Chrome offers shortcuts to open up a new tab or a new incognito tab. Only the first party Google apps currently support shortcuts but we can expect third party apps to follow suit. Android 7.1 on Pixel also comes with some cool new “Moves” like the ability to open the notification drawer by swiping on the fingerprint scanner.

SEE ALSO: How to Get the Ultimate Google Pixel Experience on Your Android Phone

Google Pixel: Arguably the best Android smartphone to buy

What Is The Expense Recognition Principle?

The expense recognition principle is a concept in accounting that says when a business should recognize its expenses.

When a business wants to recognize expenses dictates whether it should use cash or accrual accounting.

The matching principle allows businesses to recognize expenses in the same period as the revenue associated with those expenses.

This article is for entrepreneurs and professionals interested in accounting software and practices.

Business owners need to spend money where they will get results, but how can you tell which expenses are generating a return on investment (ROI)? The expense recognition principle is an accounting tool in the business owner’s toolbox to identify expenses and any associated revenue related to those expenses. This information can help business owners better plan their investments to maximize their ROI and cut expenses that aren’t leading to performance.

Editor’s note: Looking for the right accounting software for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

What is the expense recognition principle?

The expense recognition principle is a concept that outlines when a business’s expenses are recognized in the company’s financials. Typically, the expense recognition principle involves expenses being recognized and recorded in the same period as the revenues associated with those expenses (under accrual accounting). 

This method of accounting is a way for businesses to match expenses with the revenues related to those specific expenses (for example, commissions owed to employees for certain sales recorded when those sales happen, rather than later). Put another way, it shows the business using assets and converting them to expenses as their utility is expended. 

The question of when expenses should be recognized represents the biggest difference between cash and accrual accounting. Instead of recognizing revenue and expenses in the same period, if a business instead recognizes expenses when they’re incurred, that means it’s using cash accounting.

Key Takeaway

Accrual accounting centers on the idea that expenses should be recognized during the same period as the revenue that the expenses are related to. When a company undertakes expenses to engage in some revenue-producing activity, the expense recognition principle says that those expenses should be reflected in the same period as the revenue derived from those expenses.

How does the expense recognition principle work?

The expense recognition principle is a principle of accounting that helps businesses decide when and how to recognize expenses that they incur. Under the expense recognition principle, if work has been performed and you haven’t paid for it yet, you book it as an expense and accrue it as a liability. Conversely, if you have paid for something but haven’t received the associated benefit (revenue), you would book that benefit as an asset (a prepaid expense). 

The bottom line is to match your business’s revenue and expenses in the same period.

On the other hand, businesses may choose to use the cash basis of accounting, wherein they recognize revenue or expenses when cash changes hands (whether going in or out) rather than when a transaction occurs. 

When businesses recognize expenses is based on how they want to run their books – whether they want to take tax deductions earlier or later or if they want to try to match expenses with their associated revenues.

Key Takeaway

Businesses tend to prefer one accounting method or the other, and that will help decide which method they should use – assuming they have a choice. A lot of businesses are required to use accrual accounting.

Example of the expense recognition principle

Let’s say a business incurred $50,000 in labor costs for the production of its products during the last quarter of 2023, but some of its employee paychecks weren’t sent out until after the last day of the year. 

Based on the expense recognition principle, the company would still recognize those labor costs in 2023, since that’s when they were incurred. The work associated with those wages was performed in 2023, and the company benefited from that work in 2023, so the expense would be booked in 2023. The employee paychecks that hadn’t been cashed yet would simply be offset as a liability. 

In cash accounting, on the other hand, the portion of wages not paid until after the first of the year wouldn’t be recognized until 2023. In this case, the company using cash accounting would get a delayed tax benefit by recognizing those wage expenses later. Also, there’d be misalignment between wages expenses and output created when employees were earning those wages.

In other cases, companies using cash accounting actually get tax benefits later. It depends on the transaction type and when money is changing hands.

What are the methods to recognize expenses?

There are two methods that businesses can use for recognizing expenses: cash and accrual. There are rules and practices governing both types of accounting, including how to use them and who can use them. Each has its own benefits and drawbacks. If you want to use the expense recognition principle, though, accrual accounting is the better option.

CurrencyWhen are expenses recognized?When is revenue recognized?CashWhen paidWhen cash is receivedAccrualWhen incurredWhen transaction occurs


Under cash accounting, income and expenses are recognized when cash changes hands, regardless of when the transaction happened. With cash accounting, the company isn’t focused on trying to match revenue and expenses in the same period; it is instead trying to keep in its accounting thorough records of the cash flow of its accounts.

Cash accounting is often preferred because it’s simpler and easier to use. In many cases, it lets companies get the tax benefits of deductible expenses earlier than it could under accrual accounting. This is because they book expenses when they’re paid rather than when revenue starts. But not all businesses are eligible to use cash accounting.


Unlike cash accounting, accrual accounting requires businesses to record income and expenses when transactions happen, rather than when cash changes hands. Many businesses are required to use accrual accounting, including those that make over $26 million in sales in any one year over a three-year period and businesses that make sales on credit.

Accrual accounting is important because it allows businesses to match revenues with their corresponding expenses. In this way, businesses that use accrual accounting can see how they convert assets into expenses in their financials. This also makes it easier for companies to gauge the profitability of particular activities in specific periods. For more info, check out our article on cash vs. accrual accounting. 

When to use the expense recognition principle

These are some examples of when businesses can benefit from accrual accounting and the expense recognition principle.

Salaries and wages: Accrual accounting lets businesses recognize wage expenses when work is performed, rather than when paychecks are cashed.

Sales commissions: If companies are paid commissions tied to sales, those commissions should be recognized when the sales occur.

Employee bonuses: Employee bonuses should be booked in the year the bonuses are earned, rather than when checks are issued.

Depreciation: Depreciation of assets needs to occur in the year the assets were used – and part of their utility expended.

Purchase of supplies: If a business buys supplies for use in production during a later period, that expense should be booked when the supplies are used, rather than when they’re purchased.

Liability for services provided: Once you’ve received the benefit of work performed – even if you haven’t paid for it yet – the expense recognition principle says to go ahead and incur those expenses and accrue them as liabilities for bills owed.

Thankfully, it’s very easy to track expenses and recognize them consistently using top accounting software. To learn about the leading options, check out our review of Intuit QuickBooks accounting software, our Zoho Books review, and our Oracle NetSuite accounting software review.

Whether you use cash or accrual accounting, accounting software lets you choose when to recognize expenses and recognize them consistently across time periods and lines of business.

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