Amounts of money that have been earned or spent (expensed), but not yet actually received or paid (i.e., no cash flows have yet arisen). In accounting, accruals might be assets or liabilities that represent revenue or expenses, respectively for which payment has not taken place. Accruals are receivable or payable amounts but which have not been received or paid.

Accruals may be such amounts that will be received from, or paid to, a customer. Receivables are money owed by customers such as buyers on credit. Payables are money owed to stakeholders such as suppliers, employees, or tax authorities.

Examples of accruals include unpaid invoices- when an entity issues or files an invoice but have yet to receive payment. In which case, an entity records an accrued asset. On the other hand, invoices that you’ve been issued by customers, which an entity is yet to pay, would be considered accrued liabilities. Other examples of accruals include salaries and wages, which many entities typically pay only after work has been delivered (also known as arrears). Entities have to closely track such payables in order to plan its cash outflows- cash available to pay employees at the set time.

Accrual accounting is a method whereby an entity records revenue or expenses when a transaction/ event occurs using the double-entry accounting method. A payable accrual, or accrued expense, is a means of recording an expense that was incurred some time earlier but not paid so far (and hence, it is still shown as such in the financial statements).

In a related context, an accrual is an increase in an amount of money (a balance or account) over a period of time. For example, the accrual of interest is the process of adding interest to an amount extended as finance or deployed as investment. Accrual begins when the amounts of money are credited to an account.