DEFINITION of 'Accruals'

Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense.


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The use of accrual accounts has greatly increased the amount of information on accounting statements. Before the use of accruals only cash transactions were recorded on these statements. But cash transactions don't give information about other important business activities, such as revenue based on credit and future liabilities. By using accruals, a company can measure what it owes looking forward and what cash revenue it expects to receive. It also allows a company to show assets that do not have a cash value, such as goodwill.

  1. Goodwill

    An account that can be found in the assets portion of a company's ...
  2. Cash Accounting

    An accounting method where receipts are recorded during the period ...
  3. Accrued Expense

    An accounting expense recognized in the books before it is paid ...
  4. Accounting

    The systematic and comprehensive recording of financial transactions ...
  5. Accrual Accounting

    Accrual accounting is an accounting method that measures the ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when ...
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  1. What is the difference between an accrual and an account payable?

    The difference between an accrual and an account payable is that an accrual is an accounting adjustment for revenue that ... Read Full Answer >>
  2. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  3. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  4. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  5. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>
  6. How can working capital affect a company's finances?

    Working capital, or total current assets minus total current liabilities, can affect a company's longer-term investment effectiveness ... Read Full Answer >>

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