Accrual: meaning, definitions and examples
๐ฐ
accrual
[ ษหkruหษl ]
finance accounting
Accrual refers to the accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when cash transactions occur. This approach allows for the recognition of economic events more accurately in the financial statements. It contrasts with the cash basis of accounting, where transactions are only recorded when cash is exchanged. Accrual accounting provides a clearer picture of a company's financial health by matching income earned with the expenses incurred in generating that income.
Synonyms
accumulation, growth, increase.
Examples of usage
- The company uses accrual accounting to better reflect its financial position.
- Under the accrual method, expenses are recognized when incurred.
- The accrual of interest is recorded monthly in the financial statements.
Translations
Translations of the word "accrual" in other languages:
๐ต๐น acumulaรงรฃo
๐ฎ๐ณ เค เคตเคงเคฟ
๐ฉ๐ช Ansammlung
๐ฎ๐ฉ akumulasi
๐บ๐ฆ ะฝะฐัะฐั ัะฒะฐะฝะฝั
๐ต๐ฑ naliczenie
๐ฏ๐ต ็บ็
๐ซ๐ท accumulation
๐ช๐ธ acumulaciรณn
๐น๐ท birikim
๐ฐ๐ท ๋์
๐ธ๐ฆ ุชุฑุงูู
๐จ๐ฟ akumulace
๐ธ๐ฐ akumulรกcia
๐จ๐ณ ็ดฏ็งฏ
๐ธ๐ฎ akumulacija
๐ฎ๐ธ sรถfnun
๐ฐ๐ฟ ะถะธะฝะฐาัะฐั
๐ฌ๐ช แแแ แแแแแ
๐ฆ๐ฟ yฤฑฤฤฑlma
๐ฒ๐ฝ acumulaciรณn
Etymology
The term 'accrual' originates from the Latin word 'accrescere', which means 'to grow or increase'. This word has evolved to refer specifically to the process of accumulating or gathering something over time, particularly in a financial context. The concept of accrual accounting dates back to the early 20th century when it emerged as a method to improve transparency and accountability in financial reporting. Accountants sought a method that could provide a more accurate representation of a company's financial situation by considering all revenues and expenses, regardless of when cash changes hands. Thus, accrual accounting became a standard practice in the field of accounting, especially with the adoption of generally accepted accounting principles (GAAP).