Accrualmethod
Barron's Real Estate Dictionary:
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Accrualmethod
A method of accounting that requires income or expense to be entered when the amount is earned or the obligation is payable. Distinguished from cash method in which amounts are posted when paid or received.
Example: The home buyer bought and paid for a 3-year hazard insurance policy at closing. On the accrual method, only the current year’s expense is indicated.
Example: Interest on a loan is 3 months delinquent. The expense, though unpaid, appears in the current year’s financial statement under the accrual method. Under the cash method it would appear on the financial statements when paid.
Example: The home buyer bought and paid for a 3-year hazard insurance policy at closing. On the accrual method, only the current year’s expense is indicated.
Example: Interest on a loan is 3 months delinquent. The expense, though unpaid, appears in the current year’s financial statement under the accrual method. Under the cash method it would appear on the financial statements when paid.
| Accretion, Accredited Management Organization (AMO) | |
| Accrue, Accrued Expense |
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Barron's Real Estate Dictionary
Dictionary of Real Estate Terms. Copyright © 2008 by Barron's Educational Series, Inc. All rights reserved.
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