Glossary
What is accrual accounting?
Accrual accounting records revenue when it is earned and costs when they are incurred, regardless of when cash moves. Cash-basis accounting records them when money changes hands. Most management accounts are on the accrual basis, which is why profit and cash can move in opposite directions in the same month.
Also called: Accruals basis, Cash basis
An invoice raised in September counts as September revenue on the accrual basis even if the customer pays in November. The gap between the two is what debtor days and working capital measure.
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