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accrual

   Also found in: Dictionary/thesaurus, Medical, Financial, Wikipedia, Hutchinson 0.01 sec.


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One startup decision that seems to cause entrepreneurs unnecessary consternation is selecting the right accounting method -- cash basis or accrual basis The primary purpose of the accounting method you choose is to calculate your business''s taxable income for federal (and state) income tax purposes One startup decision that seems to cause entrepreneurs unnecessary consternation is selecting the right accounting method -- cash basis or accrual basis.
In 1984, the IRS announced that it would not request tax accrual workpapers from taxpayers during an examination except in unusual circumstances (referred to as the "policy of restraint") (Announcement 84-46).
Revenue on the accrual basis is recognized when earned, while under the cash basis it is recognized when collected.
 
 
 
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