Accrual
An accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash is actually received or paid.
Key Details
- Accrual accounting provides a more accurate picture of financial performance than cash-basis accounting.
- Common accruals include accrued revenue (earned but not yet billed) and accrued expenses (incurred but not yet paid).
- Accruals require adjusting journal entries at period-end to recognize transactions in the correct period.
- Automating accrual calculations reduces manual effort and ensures consistent application of accounting policies.