Accrual Accounting

Definition

A system that records revenue when it's earned and expenses when they're incurred—regardless of when cash changes hands. It's like using a credit card: the purchase happens today even if you pay the bill next month.

Related Terms

Cash Basis Accounting

A system that records revenue only when cash is received and expenses only when cash is paid. Simple, but doesn't match revenue with the period it's earned.

Learn More About Accounting

Explore our free lessons and practice labs to master accounting concepts.

Browse Lessons View All Terms