What is accrual accounting ?

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Accrual accounting is a method of accounting where revenues and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Revenue is recognized when it is earned, not necessarily when cash is received
Expenses are recorded when they are incurred, not necessarily when they are paid
Accrual accounting provides a more accurate picture of a company's financial position and performance over time
It follows the matching principle, where revenues are matched with expenses in the same accounting period
Examples include recognizing revenue from a sale when the product is delivered, and recording expenses for salaries even if they are paid in the following month

What is accrual accounting ?

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