Accrual Accounting

Description of Accrual Accounting. Explanation.

Definition Accrual Accounting. Description.

Accrual Accounting is a recording of revenue when products or services are sold, and of expenses when they are incurred, irrespective of the dates on which the associated cash flows occur.

Standard practice is to record and recognize revenues and expenses in the period which they incur. Even though cash is not received or paid in a credit transaction, they are recorded because they are consequential in the future income and cash flow of the company.

Compare with: Accounting Equation

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End of description Accrual Accounting. An explanation.