Definition, Meaning & Synonyms

accrual-basis

Noun

/əˈkruːəl ˈbeɪsɪs/

Definition

An accounting method where revenues and expenses are recorded when they are earned or incurred, regardless of when cash is actually received or paid.

Examples

The company uses an accrual-basis accounting system to better reflect its financial position.
Under the accrual-basis, income is recorded in the financial statements when it is earned, not when the payment is received.
Many businesses transition to an accrual-basis method as they grow to comply with accounting standards.

Meaning

Accrual-basis accounting provides a more accurate financial picture of a company by recognizing economic events as they occur, rather than when cash changes hands.