Accrual Accounting
Recording revenue and expense when they are earned or incurred.
Definition
Accrual Accounting is Recording revenue and expense when they are earned or incurred. It comes up most often when the team has to decide whether timing is driven by operational activity or by actual cash movement.
The term keeps showing up because that choice changes how revenue and expense appear in a period, even when the business itself has not changed. You usually see this term when comparing management reports, tax treatment, or close procedures.
Use cases
Use Accrual Accounting to explain why the same property can look different under two accounting views.
Review Accrual Accounting when the team needs to line up reporting expectations before month-end closes begin.
Track Accrual Accounting so operations can keep managers clear on whether a result reflects operations or just cash timing.