Accrual Basis Accounting
/əˈkruːəl ˈbeɪsəs əˈkaʊntɪŋ/
Definitions
- (n.) An accounting method recognizing revenues and expenses when they are earned or incurred, regardless of cash flow timing.
Under accrual basis accounting, a company records revenue when a sale is made, not when payment is received.
Forms
- accrual basis accounting
Related terms
See also
Commentary
Accrual basis accounting is fundamental for legal financial compliance and contract-related revenue recognition; precision in timing can affect legal obligations and reporting.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.