Financial Glossary
Accrual Accounting
What is Accrual Accounting?
Accrual accounting is a financial method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur. This system provides a more accurate financial picture compared to cash accounting, making it ideal for businesses that need detailed financial tracking.
Accrual vs. Cash Accounting – What’s the Difference?
| Feature | Accrual Accounting | Cash Accounting |
|---|---|---|
| Records Revenue When | Earned (invoice sent) | Received (cash in hand) |
| Records Expenses When | Incurred (bill received) | Paid (money spent) |
| Best For | Large businesses, GAAP compliance | Small businesses, simpler bookkeeping |
📌 Related: Balance Sheet | Bookkeeping
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