Accruals basis

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In financial accounting, the spreading of profits and losses on hedging instruments over the life of the underlying exposure being hedged.


In accounting more generally, the appropriate spreading of income and expenditure items into the periods to which they relate.

This may differ from the period in which the associated cash receipts or payments take place.

(An alternative simpler basis of accounting would be a cash basis - usually only used for small entities for example not-for-profit clubs.)


A basis of taxation which follows the accruals basis of financial accounting.

In the UK, the Companies Act 2006 requires directors to ensure that annual accounts give a true and fair view. Accruals accounting would almost invariably be required, in order to give a true and fair view.

Loan relationship income is taxed on an accruals basis for UK tax purposes.

4. UK tax.

The recognition for UK tax purposes of all profits and losses on a loan relationship over the life of the loan.

See also