{"id":264066,"date":"2023-06-28T13:34:21","date_gmt":"2023-06-28T01:34:21","guid":{"rendered":"https:\/\/www.reckon.com\/nz\/?page_id=264066"},"modified":"2025-01-29T09:57:22","modified_gmt":"2025-01-28T21:57:22","slug":"accruals","status":"publish","type":"glo","link":"https:\/\/www.reckon.com\/nz\/glossary\/accruals\/","title":{"rendered":"What Does Accrued Mean?"},"content":{"rendered":"

[et_pb_section fb_built=”1″ custom_padding_last_edited=”off|desktop” _builder_version=”4.27.2″ custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” custom_padding_phone=”0px||||false|false” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.27.2″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_margin=”0px||0px||false|false” custom_padding=”0px||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f4f4f4″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Definition description + related terms” _builder_version=”4.27.4″ header_2_font_size=”32px” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n

In accounting, the words \u2018accrue\u2019, ‘accrued’ or \u2018accrual\u2019 refer to a specific method of recording expenses and revenues as they occur.<\/p>\n

Accrual accounting<\/h2>\n

Accrual accounting is a method whereby you record your business\u2019 revenues and expenses when they are earned or incurred, regardless of when the money has been received or paid.<\/p>\n

Regardless of whether you\u2019ve settled the invoice or not, with an accrued expense, if you\u2019ve ordered supplies but not yet paid the invoice you will still record it as an expense in the same reporting period.<\/p>\n

The accrual accounting approach ensures that your financial statements and balance sheet<\/em> accurately reflect your true financial position and performance over a set timeframe<\/em>.<\/p>\n

[\/et_pb_text][et_pb_image src=”https:\/\/www.reckon.com\/nz\/wp-content\/uploads\/2024\/08\/accrual-accounting.png” alt=”What does accrued mean? ” title_text=”Accrual Accounting” align=”center” _builder_version=”4.27.0″ _module_preset=”default” global_colors_info=”{}”][\/et_pb_image][et_pb_text admin_label=”Definition description + related terms” _builder_version=”4.27.4″ header_2_font_size=”32px” header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}”]<\/p>\n

Accounts payable and accounts receivable in accrual accounting<\/h2>\n

Your accounts payable and accounts receivable ledgers sit at the heart of accrual accounting.<\/p>\n

Accrued expenses and accrued revenues are recorded in a company’s financial statements as accounts payable and accounts receivable, respectively.<\/p>\n

When you have an accounts payable ledger, this is a record of all the accrued expenses you\u2019ve incurred but have not yet paid for. Thus, they are seen and recorded as expenses, even though you haven\u2019t paid them yet.<\/p>\n

Similarly, your accounts receivable ledger records all income that\u2019s owed to you (but has not yet been paid by the client). With accrued income, your accounts receivable is seen and recorded as income or revenue, even though you\u2019ve not received the payment.<\/p>\n

Cash accounting vs. accrual accounting<\/h2>\n

The other method of recording expenses and income is to use \u2018cash accounting\u2019. With cash accounting, you only record a sale or an expense<\/a> on your books when money has changed hands.<\/p>\n

As it does not consider money owed, the cash accounting method gives less clarity of the current financial state of your business, compared with accrual accounting.<\/p>\n

Accrued interest<\/h2>\n

The word \u2018accrued\u2019 also includes any interest you accumulate on a debt. Thus, any interest applied to a debt that has not yet been paid is still recorded and reported upon, even though the payment has not been received by the lender (or paid by the borrower).<\/p>\n

See related terms<\/strong>
What is a ledger?<\/a>
What is cash flow?<\/a>
What are fixed assets?<\/a><\/p>\n

 <\/p>\n

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In accounting, the words \u2018accrue\u2019, ‘accrued’ or \u2018accrual\u2019 refer to a specific method of recording expenses and revenues as they occur. Accrual accounting Accrual accounting is a method whereby you record your business\u2019 revenues and expenses when they are earned or incurred, regardless of when the money has been received or paid. Regardless of whether […]<\/p>\n","protected":false},"author":6,"featured_media":0,"menu_order":0,"template":"","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"","footnotes":""},"class_list":["post-264066","glo","type-glo","status-publish","hentry"],"yoast_head":"\nWhat Does Accrued Mean | Definition and Examples | Reckon NZ<\/title>\n<meta name=\"description\" content=\"Learn more about the accrual accounting method, an accounting term for how you record your expenses and revenue.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.reckon.com\/nz\/glossary\/accruals\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Does Accrued Mean?\" \/>\n<meta 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