Accrual accounting
Recording revenue and costs when they are earned or incurred, not when cash moves.
Last reviewed 12 September 2026
Accrual gives an honest picture of performance: the March project shows in March even if the client pays in May.
It is also why profitable companies go broke. Run accrual for the P&L and cash for survival — you need both views.
Frequently asked
What is accrual accounting?+
Recording revenue and costs when they are earned or incurred, not when cash moves. Accrual gives an honest picture of performance: the March project shows in March even if the client pays in May. It is also why profitable companies go broke. Run accrual for the P&L and cash for survival — you need both views.
Why does accrual accounting matter for founders?+
It is also why profitable companies go broke. Run accrual for the P&L and cash for survival — you need both views.
Related terms
Cash basis accounting
Recording revenue and costs only when money actually moves.
P&L (profit and loss)
A statement of revenue, costs, and profit over a period.
Cash flow
The money that actually moved in and out of your bank account over a period.
Deferred revenue
Cash received for work you have not delivered yet.
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