Accrual basis
In accounting, accrual basis means recognizing revenue when earned and expense when incurred, regardless of when cash moves.
- Layer
- Lexicon
- Defined in
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Authority
This definition follows CON 8, Ch. 4, App. A.
Every citation in this system, with the text we read and the date we checked it, is in US GAAP and where these rules come from.
The lesson that teaches this
Accounting, 0 to 1 — a free course taught end to end on one month of one company, with the spreadsheet exercises to work it yourself.
Accrual basis, in use
Quoted from the 2 documents that use the word — what it does to an interface, in the spec's own sentence.
A P&L on cash basis versus accrual basis are different statements, and a user who doesn't know which they're looking at is being misled.
QBO keeps it as UnappliedAmt on the payment; on the accrual basis that credit sits in Accounts Receivable, and the "Unapplied Cash Payment Income/Expense" lines appear only on cash-basis reports.
Lopifi APIs: Xero, QuickBooks Online, NetSuite — 7. Payments and allocation
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- Accrual basisRevenue is recorded when it's earned and expenses when they're incurred, whatever day the cash moves.
- US GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- How to read an income statement (P&L)Revenue, cost of revenue, gross margin, operating expenses and net income, read line by line, on accrual basis, with the mistakes founders make most.
- Accrued expenses vs accounts payable: the differenceAP is a bill you’ve received; an accrued expense is a cost incurred before the bill arrives. When to accrue, and how reversing entries work, by example.
What it is not called
Each of these is a real word for a different thing. Using it here is what makes a product read as though it was built by someone who has not done the work.
- the accrual method
Components that render this
The concept is not documentation-only. These are the components that name it in their specification, grouped and stated exactly as the catalog states them.
Components that render the terms it depends on
Little in the catalog names this concept outright, but its definition is built out of others that are named. These render accrual, expense, revenue.
Terms this one depends on
- AccrualAn expense incurred, or revenue earned, before it is invoiced — recorded at period end so it lands in the right period
- ExpenseOutflows or using up of assets, or incurrences of liabilities, from delivering goods or services — recognized when incurred, not when paid
- RevenueInflows or enhancements of assets, or settlements of liabilities, from delivering goods or services — recognized when control transfers, not when cash arrives
- BasisCash or accrual
Also in Foundations
Work with this concept
The calculators that compute it and the ledger payloads that carry it. A definition is where a reader starts; these are where they go next.
Defined in Lexicon. This page is generated from that document, so the two cannot disagree.