What is Accruals?

Accruals (Definition)

Accruals are purchases you have been invoiced for but have not yet been paid, or sales you have fulfilled but the customer has not yet paid you for. In accounting, a business’ net income is impacted by accruals even if no cash has changed hands. In business financials, it can include accounts payable and receivable, accumulated tax obligations, and accrued interest earned or payable. Expense accruals can include bonuses, salaries, and wages that are due; consumer warranty fees, returns, and repairs; interest on debt; utility expenses that have not been paid yet. Revenue accrual could include ongoing accounts – say you are working on a long term project that is due to be paid to you in three months, you might record the first month as revenue even though you won’t be paid yet.