Dictionary / Accrual
What does Accrual mean in accounting?
Quick definition
Accrual & timingThe recognition of income and expenses as they occur even if not received or paid for until later. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
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Examples
Plants used before the nursery bills
Your landscaping crew finished an apartment-complex install on April 28 using $1,640 of shrubs from the nursery. The nursery has not billed you by the April 30 close. Post an accrual dated April 30: debit Job materials $1,640 and credit accrued expenses $1,640. The April P&L and general ledger now show the plants even though cash has not gone out. When the nursery's May 8 bill arrives in QuickBooks Online or Xero, reverse the accrual and enter the bill so the $1,640 does not hit twice.
A logo finished before you invoice
On June 27 your branding studio delivers the final logo package to a dental-office client, but you will not invoice the $3,200 until July 3. At the June 30 close, post an accrual: debit accrued revenue $3,200 and credit Design income $3,200 so June shows the work you already finished. After the July invoice posts, reverse that accrual so the $3,200 does not hit twice. Waiting for the bank deposit is cash basis timing, not an accrual.
Why it matters
An accrual is the recognition that puts income or a cost into the accounting period it happened, even though cash has not moved. You will post these most month-ends if a vendor bills late, wages cross the last day, or you finish work before you send an invoice. Skip it and that month's P&L is missing a sale or a cost; leave it sitting after the real bill or invoice posts and you count the same item twice. One accrual is a single adjusting entry at close, not a switch of the whole file to accrual basis.
Further reading
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What is Accrual in bookkeeping?
The recognition of income and expenses as they occur even if not received or paid for until later.
When should I use Accrual?
Use Accrual when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Accrual?
Accrual is used for accrual entries, while Abandonment covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.