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Accounting
Accrual
Recording revenue or expenses when they are earned or incurred, not when cash actually moves.
Accruals make financial statements more accurate and useful. Almost all larger businesses use accrual accounting. It follows the matching principle — match revenues with the expenses that created them.
It's writing down the pizza you ate on your IOU list the moment you eat it, not when you finally pay the delivery guy.
Real world: A company does £10,000 of work in December but doesn’t get paid until January. With accrual accounting they record the revenue in December so the books show the true performance for the year.
💡 Accrual accounting shows the real picture, not just the current bank balance.