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Fundamental
Accrual Accounting
Recognizes revenues and expenses when earned/incurred, not when cash moves
Definition
Accrual accounting recognizes revenues when they are earned and expenses when they are incurred, regardless of when cash actually changes hands. This provides a more accurate picture of a company's financial performance and position than cash accounting. However, it can create differences between reported profits and actual cash flows.
Related Topics
#accounting
#revenue
#expenses
#cash flow
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Category: Fundamental
Fundamental analysis examines a company's financial health, management quality, and market position to determine intrinsic value.
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