ACCRUAL Meaning and
Definition
-
Accrual refers to the accumulation or increase of something over time, particularly in relation to financial matters. It is commonly used in accounting and finance to account for expenses, revenue, or other economic events that have occurred but not yet been recorded.
In terms of expenses, accrual represents the recognition of costs that have been incurred but not yet paid. This is typically done through accrual accounting, where expenses are recorded in the period in which they are incurred and not when they are actually paid. For example, if a company receives services in one month but the invoice is paid in the following month, the expense would be recorded in the month it was incurred, rather than when the payment was made.
Similarly, accrual is also used to record revenue that has been earned but not yet received. This helps in recognizing income in the period it is earned, rather than when the payment is received. For instance, if a business provides services to a customer and sends an invoice, but the payment is received in the subsequent month, the revenue would be recorded in the month it was earned.
Accrual can also refer to the accumulation of interest or other similar financial gains or charges. This occurs when the interest or charges are added to the principal amount over time, increasing the total balance. For example, interest or penalties that accumulates on a loan before it is paid off would be considered an accrual.
Overall, accrual is a crucial concept in financial management and accounting as it helps ensure that transactions are recorded accurately and fairly, regardless of when they are paid or received.
Top Common Misspellings for ACCRUAL *
* The statistics data for these misspellings percentages are collected from over 15,411,110 spell check sessions on www.spellchecker.net from Jan 2010 - Jun 2012.
Other Common Misspellings for ACCRUAL
Etymology of ACCRUAL
The word accrual is derived from the Old French word acreue which means growth or increase. It further originates from the Latin word accretionem, which is the nominative form of accretio meaning an increase or addition.
Similar spelling words for ACCRUAL
Infographic
Add the infographic to your website:
