Accruing

Accruing describes the process of accumulating something over time. In finance and accounting, to accrue means to recognize income or obligations before cash actually changes hands. This approach, known as accrual accounting, aims to match revenues with the expenses that produce them and to reflect economic activity more accurately than cash-based methods.

Accrued revenues are revenues earned by providing goods or services but not yet billed or collected. They are recorded as revenue and as an asset, typically accounts receivable. Accrued expenses are costs incurred in the period but not yet invoiced or paid; they are recorded as an expense and as a liability, such as accrued liabilities.

Interest and other time-based charges commonly accrue. For example, interest on a loan can accumulate daily, and at period end a company records interest expense and an interest payable liability even if no payment has been made.

Adjusting entries are used to bring the accounts into compliance with accrual accounting at period end. The technique is widely used in financial reporting and taxation in many jurisdictions.

Beyond accounting, the term accrual can appear in other contexts to describe the gradual buildup of rights, benefits, or claims over time, or the moment at which a statute of limitations or policy begins to apply. The core idea is time-based accumulation that precedes actual cash flow or formal recognition.