accruals basis
The matching of *revenues and *expenses to the periods in which they are earned or incurred. In contrast to a *cash basis approach, which *recognizes revenues and expenses in line with the receipt or payment of cash, an accruals basis of accounting is based on the timing of the underlying transaction. For example, when *interest payable to a bank is incurred evenly over a year, but payment falls due only at the year-end, the accruals basis of accounting requires recognition of the interest expense on a monthly basis. Most systems of *Generally Accepted Accounting Principles require an accruals basis of accounting. The accruals basis operates through the mechanisms of *accrued revenue, *unearned revenue, *accrued expenses, and *prepaid expenses. Deliberate bending or circumvention of the accruals concept is a common *creative accounting technique.

Auditor's dictionary. 2014.

Look at other dictionaries:

  • accruals basis — UK US noun [S] (also accrual basis) ACCOUNTING ● the accruals basis Cf. the accruals basis ● on an accruals basis Cf. on an accruals basis → See also MATCHING(Cf. ↑ …   Financial and business terms

  • accruals basis — An accounting convention under which payments are allocated to the periods to which they relate, rather than the period in which they are paid or received or become due or receivable (that is, the cash basis). Related links cash basis cash flow …   Law dictionary

  • accruals basis — /ə kru:əlz ˌbeɪsɪs/, accruals concept /ə kru:əlz ˌkɒnsept/ noun a method of preparing accounts in which revenues and costs are both reported during the period to which they refer and not during the period when payments are received or made …   Dictionary of banking and finance

  • on an accruals basis — ► using the accruals basis of accounting: »The costs are charged on an accruals basis. Main Entry: ↑accruals basis …   Financial and business terms

  • the accruals basis — ► (also the accrual(s) method, also the accrual(s) principle) a method used in accounting in which amounts of money are recorded at the time something is bought or sold, although payments may not yet have been made or received: »While the full… …   Financial and business terms

  • Basis — Regarding a futures contract, the difference between the cash price and the futures price observed in the market. Also, it is the price an investor pays for a security plus any out of pocket expenses. It is used to determine capital gains or… …   Financial and business terms

  • basis — The difference between the current cash price and the futures price of the same commodity. Unless otherwise specified, the price of the nearby futures contract month is generally used to calculate the basis. Chicago Board of Trade glossary The… …   Financial and business terms

  • accrual basis — See accrual convention. American Banker Glossary In the context of accounting, practice in which expenses and income are accounted for as they are earned or incurred, whether or not they have been received or paid. Antithesis of cash basis… …   Financial and business terms

  • the accruals principle — UK US noun [S] ► ACCRUALS BASIS(Cf. ↑accruals basis) …   Financial and business terms

  • cash basis — see basis 2 Merriam Webster’s Dictionary of Law. Merriam Webster. 1996. cash basis …   Law dictionary

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