Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

accrual method of accounting

Read a random definition: broader than the invention

A quick definition of accrual method of accounting:

The accrual method of accounting is a way that big businesses keep track of their money. It means they report all the money they expect to get and all the money they owe, even if they haven't paid or received it yet. This helps them have a better idea of how much money they have at any given time. The government makes most big businesses use this method because it's more accurate. Some businesses use a different method called the cash method, which only reports money when it's actually paid or received.

A more thorough explanation:

The accrual method of accounting is a way that most large businesses use to report their liabilities and expected income. This method requires businesses to report all economic transactions, whether liabilities or income, when all the events have occurred which fix the right to receive such income. This method is used by businesses with very complex and numerous transactions occurring.

For example, if a company signs a sale contract to purchase a warehouse but has not paid yet, the accrual method would require the company to report the transaction because it is likely to occur. However, the cash method would not require reporting the transaction until the payment occurred.

The Internal Revenue Service (IRS) requires most businesses with income above $25 million to use this method of accounting because it more accurately reflects the current financial status of businesses. Some businesses also use the cash method of accounting which only reports transactions when they occurred.

accretion | accrue

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
jack moving up in the world :)
i have a brother named jack, so whenever i see your name im marginally happier than normal
babycat
16:37
I'm guessing you don't have a sibling named babycat but I hope I still make you marginally happier than normal despite this
JumpySubsequentDolphin
16:38
maybe he has a babycat
babycat
16:38
I think everyone should have a babycat
JumpySubsequentDolphin
16:39
im allergic to baby cats >:(
JumpySubsequentDolphin
16:40
I used to have a babycat, I only got allergies after he died
JumpySubsequentDolphin
16:40
I think he’s haunting me
babycat
16:40
:(
babycat
16:40
that's too bad
babycat
16:40
you still have me though <3
@babycat: you make my day marginally happier with your scathing wit
16:43
New Father John Misty album out today
16:44
People saying it’s his best yet by far
babycat
16:45
what would I do without you renard99
awww ty wasp :)
i have 4 (baby) cats!
16:46
Damn you know her sarcasm is meant to be scathing when she calls me by my full username and not just Renard
JumpySubsequentDolphin
16:47
@jackfrost11770: FOUR?!??
16:48
I’m only teasing Babycat ily I’ll be seeing you in [REDACTED] very very soon
YES
and they're all rescues from breeders so they're all long haired persians .... w flat faces ....
they're all runts cause breeders just ... dispose of them (:(((() so they're all super tiny
literal babies
babycat
16:49
ily2 renard99
initiallaw
16:49
omg so cute
JumpySubsequentDolphin
16:51
@jackfrost11770: IM SO JEALOUS
2big2fail
16:52
perhaps peggerdine this evening
2big2fail
16:52
but then again, perhaps not
JumpySubsequentDolphin
16:53
damn no ucla wave
LSD+ is ad-free, with DMs, discounts, case briefs & more.