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Simple English definitions for legal terms

accrual basis

Read a random definition: American Forces Information Service

A quick definition of accrual basis:

Accrual basis is a way of keeping track of money for taxes. It means that you record money you owe or will get in the future, even if you haven't paid or received it yet. This is different from cash-basis accounting, where you only record money when it's actually paid or received. Accrual basis helps give a more accurate picture of a company's financial situation.

A more thorough explanation:

The accrual basis is an accounting method that records entries of debits and credits when the liability arises, rather than when the income or expense is received or disbursed. This means that income and expenses are recognized when they are earned or incurred, regardless of when the cash is received or paid out.

  • Accrual Accounting Method: A company provides services to a client in December but does not receive payment until January. Under the accrual basis, the company would recognize the revenue in December when the services were provided, even though the payment was not received until the following year.
  • Cost Accounting Method: A company purchases a piece of equipment for $10,000. Under the cost accounting method, the equipment would be recorded on the company's books at its cost of $10,000.
  • Percentage-of-Completion Method: A construction company enters into a contract to build a new office building for $1 million. Under the percentage-of-completion method, the company would recognize revenue gradually as the building is constructed, rather than recognizing all of the revenue when the project is completed.

These examples illustrate how the accrual basis records income and expenses when they are earned or incurred, rather than when the cash is received or paid out. This method provides a more accurate picture of a company's financial position and performance, as it reflects the company's economic activity rather than just its cash flow.

accrual accounting method | accumulation

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JumpySubsequentDolphin
21:35
no he’s literally like 8 and he fully just put his head on my bicep and slept
JumpySubsequentDolphin
21:35
he has since moved
22:12
@SplitterusClitterus: me yesterday
gulc baby pls text me back... i miss you ...... :(
22:23
i just went into a discord vc and yelled "YALL I JUST GOT INTO J.M. SCHOOL OF LAW"
22:24
people were getting excited :sob:
22:25
then someone was like "what does jm stand for" and i was like .. well
AHHAHAHAHAHAHHAHAHAHAHAHAH
@JumpySubsequentDolphin: wait this is so cute, also where r u going
JOE MBIDEN
JumpySubsequentDolphin
22:39
@splitty Oregon!
oh yay for what thats so random
JumpySubsequentDolphin
22:45
haha my brother and sister in law live there
so cutie oregon is beatiful
soyalmondoatmilk
8:38
good morning! hoping waves will come our wave today
8:42
GW wave today?
8:57
There’s someone I found on here with the username threeoutchange and if my understanding is correct that’s a reference to the debut album by a pretty cool 90s-00s Japanese band called Supercar. I geeked a little
8:57
It could just be a baseball reference I don’t get though lol
Dkk
9:00
@renard99: also, the same band that does a song in the anime Eureka 7 which I watched when I was like idk, 12
9:00
Yeah! They are pretty good. Three Out Change is an awesome J-rock record
Dkk
9:01
I will probably not listen to them more but fun fact. Really random to start the day. An omen that the waves will be very random today.
Dkk
9:03
Fuck, reading the wikipedia now. Literal last song they did before they broke up was Storywriter. Wow.
9:05
That one is a masterpiece
9:05
My favorite song by them is Recreation
glovediedthisishismom
9:05
snowing
Dkk
9:07
@renard99: man, hard to find.
Dkk
9:07
@glovediedthisishismom: Congrats on the snow.
Dkk
9:16
@renard99: Poetic and nice.
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