Whatโs Accrual Anyway?ยง
So youโve probably heard the term โaccrualโ tossed around at your monthly board meeting, or perhaps on that one show where everyone wears too many suits. But what does it mean? Put simply, accrual is the practice of recording revenues and expenses when they are earned or incurred, not when the cash actually changes hands.
Imagine youโve just delivered twelve dozen donuts to an office building for one epic morning meeting. Even though you havenโt been paid yet (and, letโs face it, some days you might never get paid for your forward-thinking donut venture), under accrual accounting, you would still record the revenue right when those delicious pastries hit the conference room table.
Accrued Charge: Accountingโs Version of a Mystery Meatยง
Now that weโve whetted your appetite with talk of donuts, letโs dive into the delightfully quizzical world of the accrued charge. An accrued charge refers to an expense that is recognized on the books before it has been paid. Itโs like promising your future self youโll sort out that payment - but for now, it sits right there on your books, staring you down.
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