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Simple English definitions for legal terms

accrual basis

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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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MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
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