accrual basis
Financial Dictionary — Business & Management
Definition
Method of accounting that recognizes revenue when earned, rather than when collected. Expenses are recognized when incurred rather than when paid.
Common Uses
- Used in planning, organizing, and controlling business operations.
- Used when setting KPIs, policies, procedures, and improving processes.
- Used when setting KPIs, policies, procedures, and improving processes.
Practical Example
- Example: Management applies **accrual basis** when designing policies and monitoring performance against targets.
Why This Term Matters
- Why it matters: Improves execution, accountability, and decision speed while reducing operational waste.