Definition
Accrual is an accounting principle by which transactions are recorded and recognized at the moment they occur, regardless of the date of payment or collection. In other words, expenses are recorded when payment commitments are made, and income is recorded when the right to collect it arises.
Further information
For example, in the case of the sale of goods, the accrual occurs at the moment when the ownership of the good in question changes (even if the payment is advanced or postponed).
Another example would be a company that acquires a bond that pays interest annually. According to the accrual basis of accounting, the company must recognize the accrued interest in its accounting records as it is earned, even though the actual payment is received at the end of the year. This means recording the interest income in the financial statements for the period in which it is earned, regardless of when the cash is received.
Related concepts
Update date: May 2025
