Accounting
Accrual Basis Accounting
An accounting method that records revenue when earned and expenses when incurred, regardless of cash timing.
Accrual basis matches revenue with the cost of producing it, giving a clearer picture of true profitability period over period. It uses receivables, payables, deferred revenue, and accrued expense accounts to bridge cash and reality.
Required for companies above ~$30M average gross receipts (with C-corp partner) and effectively required by most lenders and investors. Accrual is the default for GAAP financial statements.
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Monthly close, accrual-basis financials, and a ledger that holds up when a lender, a buyer, or an examiner asks to see it.