Accrual-basis accounting: definition, example, and why it matters
Better matches revenue to costs. Required for inventory-based businesses and larger companies. Means you can owe tax on invoices you haven't been paid for yet.
Short definition. Recording income when earned and expenses when incurred, regardless of cash timing.
Category. Accrual-basis accounting is a accounting term used by service businesses when billing customers.
How Glo Invoice handles it. Glo Invoice builds accrual-basis accounting into the invoice itself, so you don't track it on paper or in a spreadsheet.
Frequently asked questions
What does accrual-basis accounting mean?
Better matches revenue to costs. Required for inventory-based businesses and larger companies. Means you can owe tax on invoices you haven't been paid for yet.
Related terms
Cash-basis accounting — Recording income when cash is received and expenses when cash is paid.
