What are Accruals?

Accruals are business expenses which remain unpaid at the end of an accounting period but which are incurred during the accounting period.

The term is often used when producing journal entries at the end of an accounting period. Suppose for example you pay a performance bonus related to sales, and payment is made at the end of each quarter. At the end of each month you would need to accrue the liability for the bonus due in respect of that months sales, even though payment is not yet due. The amount accrued would be posted to the Accruals account using a Journal.

For further information on Accruals see the Wikipedia definition.

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Last modified March 23rd, 2016 by Team

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