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 ?
Outstanding GIDC of industry was at Rs21.8 billion, as the industry had deposited Rs12.1 billion against the total accrual of Rs34 billion.
Captive power's outstanding GIDC was Rs63.4 billion after it deposited Rs8.8 billion against the total accrual of Rs72.2 billion.
In a seminal paper, Sloan (1996) shows that the accrual component of earnings is less persistent than the cash component.
Another stream of literature argues that the accrual anomaly is a manifestation of a more general growth anomaly (e.g., Fairfield, Whisenant and Yohn 2003; Zhang 2007 and Li, Lundholm and Minnis 2011).
Accrual transactions and timely recognition of revenues and expenses when they are incurred (regardless of cash received for revenues and paid for expenses) creates the full picture of future cash flows, thus enhancing cash management and prediction (Berger, 2018).
Inventory policies are also affected by specific characteristics of accrual recordings.
In addition, prior studies find evidence that insurers can use discretionary accruals in an attempt to mask solvency issues (e.g., Petroni, 1992; Gaver and Paterson, 2004; Grace and Leverty, 2012).
In Indonesia, there are few empirical studies on the adoption of accrual accounting.
The budget prepared under the accrual accounting norms presents long-term events while the budget prepared under the cash accounting norms present short-term ones.
The effect of subjectivity in measuring accounting items roots in the commitment which creates accruals in basic financial statements.