When doing Accrual Accounting, you are tracking the current liquid amount you have, and also the cash that soon to come in or go out.
The transactions that are upcoming and haven’t actually happened are called Accruals. Like that 100 USD income that a Customer owes you but hasn’t paid you yet.
Transactions that haven’t happened yet, or money that is yet to be sent or received.
Unpaid invoices, Sales taxes, salaries and wages are very good example of Accruals. They are committed but not completed.
In some countries and industries, a business must account for accrued income and expenses when submitting their end-of-year tax returns.
Categories
