What is an accruals journal, and how is it used in accounting?

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Accepted Answer

An accruals journal is used in accounting to record expenses and revenues that have been incurred but not yet paid or received.

Accruals journal entries are used to match expenses with revenues in the same accounting period, even if the cash transaction has not occurred yet.
Accruals help provide a more accurate representation of a company's financial position by recognizing expenses and revenues when they are incurred, not when cash changes hands.
For example, if a company receives a utility bill in December but does not pay it until January, an accrual entry would be made in December to recognize the expense.
Accruals are necessary for adhering to the matching principle in accounting, which states that expenses should be recognized in the same period as the revenues they help generate.

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