Accrual

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Revision as of 09:57, 16 September 2020 by imported>Doug Williamson (Expand 2nd definition. Source: linked pages.)
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1. Financial reporting.

An amount owing - but not yet invoiced - for:

  • Services or goods received before the end of the accounting period; or
  • Other economic benefits enjoyed before the end of the accounting period.


An accrual is a form of liability, because it represents cash that will have to be paid out in the future, for a benefit that has already been received.

Accruals may include estimates about the amounts of final future payments, or their likelihood, or both.


2. Financial reporting.

Any application of the accruals basis of financial reporting (also known as the matching basis).

This is the usual basis for commercial organisations and medium sized and larger not-for-profit organisations.

Indeed it is mandatory in most financial reporting systems, in order to give a true and fair view in the financial statements.


3. Pensions.

In a defined benefit pension scheme, the build up over time of entitlement to future benefits, resulting from additional years of pensionable service.


See also