What are accruals in accounting?

What Are Accruals? Accruals are revenues earned or expenses incurred that impact a company's net income on the income statement, although cash related to the transaction has not yet changed hands. Accruals also affect the balance sheet, as they involve non-cash assets and liabilities.

What does accrue mean in accounting?

The term accrue is often related to accrual accounting, which has become the standard accounting practice for most companies. Accrue is the accumulation of interest, income, or expenses over time—interest in a savings account is a popular example. When something financial accrues, it essentially builds up to be paid or received in a future period.

What happens when something financial accrues?

When something financial accrues, it essentially builds up to be paid or received in a future period. Accrue most often refers to the concepts of accrual accounting, where there are accrued revenue sand accrued expenses. Accrued revenue is when a company has sold a product or service but has yet to be paid for it.