Simple English definitions for legal terms
Read a random definition: American Forces Information Service
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.
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.