accrue

Accrue is a verb meaning to accumulate or become due over time. It can describe amounts that are earned or owed but not yet received, including interest, dividends, royalties, or benefits. The term comes from Latin accrescere, meaning to grow, and passed into English via Old French.

In finance and accounting, accrual refers to recognizing revenues and expenses when they are earned or incurred, not when cash changes hands. This accrual basis of accounting contrasts with cash basis accounting, which records transactions only when cash is exchanged. Accrued revenues are amounts earned by providing goods or services that have not yet been billed or collected. Accrued expenses are obligations incurred during a period but not yet paid, such as wages or interest. Accrued interest represents interest that has accumulated on a loan or investment but has not yet been paid. The related term accrual describes the recognized amount at a given date and is reported on the income statement and balance sheet as appropriate.

In legal and contractual usage, the phrase "accrue to" denotes something that becomes due to a person or party over time, such as benefits accruing to employees with length of service or rights accruing under an agreement. Accruals ensure that financial statements reflect economic activity in the period it occurs, aligning with the matching principle in accounting and providing a clearer picture of an entity's obligations and resources.