accrual


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Related to accrual: accrual basis, Accrual accounting

Accrual Accounting

A system of accounting that recognizes revenue and matches it with the expenses that generated that revenue. Unlike other systems of accounting, which recognize revenue and expenses in the order in which they are received, the accrual accounting convention ignores the function of time and only considers what expenses generate what revenues, even if payments have not actually been made. Companies with inventories are required to use the accrual method for tax purposes.

accrual

an expense which is outstanding at the end of a trading period and which needs to be included in the accounting results for the period. For example, an unpaid INVOICE for car repairs would be included in the expenses of the trading period in calculating profits, since the repair costs relate to that period; the unpaid bill is counted as a liability of the firm at the period end, and afterwards until it is paid, and is added to CURRENT LIABILITIES in the firm's BALANCE SHEET. See PREPAYMENT.
References in periodicals archive ?
The evidence, however, is inconsistent with explanations from accrual reliability or earnings management.
Discussions on Other Factors: Diminishing Marginal Returns on Investment, Earnings Management, and Accrual Reliability
Another approach to converting from the cash basis to accrual basis operating income involves working with the changes in the account balances.
Two approaches can be used to convert cash basis income to accrual basis income.
Ball, Kothari and Robin (2000) support the idea that the legal regime, particularly regarding the type of governance implemented, impacts accrual anomaly.
Despite the growing number of empirical works on accruals in general, research on accrual anomaly is still incipient in Brazil.
When using the reserve error-based accrual measure in both models, the coefficient on [sigma](NIBE) is positive and significant as predicted.
Nelson, 2003, Management of the Loss Reserve Accrual and the Distribution of Earnings in the Property-Casualty Insurance Industry, Journal of Accounting and Economics, 35: 347-376.
The effect of subjectivity in measuring accounting items roots in the commitment which creates accruals in basic financial statements.
Accruals also obey the law since in recognizing and accounting them subjectivity is used to the extent that causes low stability in these items.
EXHIBIT 2 Jones Model and Modified Jones Model to Measure Discretionary (Abnormal) Accruals Discretionary (abnormal) accruals are measured by the extent to which total accruals deviate from predicted nondiscretionary (normal) accruals.