Accrual
Definition
An accrual is recording an expense or revenue in the period it happens, even if cash has not yet moved. Accruals match income and costs to the right time period.
Example
Employees work the last three days of March but will be paid in April. The wages are an accrual — the expense belongs to March even though cash leaves in April.
Why It Matters
Accruals make financial statements more accurate for the period they cover. Without them, profit and expenses would be shifted into the wrong months.