Definition: Accruals are terms used in accounting for transactions that occur on a monthly, quarterly, or annual basis to identify cash receipts and expenditures from the previous period. These transactions include: 1.

Monthly Sales

: Accounts receivable from customers who have not yet received payment for their products. 2.

Quarterly Mergers

: Transactions related to the consolidation of two or more businesses into one entity. 3.

Year-End Tax Settlements

: Payments that are made for the year's taxes and are settled within a specific time frame, typically accounting period. 4.

Mortgage Payments

: Interest on mortgage payments received from borrowers in their monthly payment schedule. 5.

Capital Gains

: Profits realized from selling assets to acquire new investments or to reduce debt. Accruals are useful for identifying the timing of transactions and ensuring that financial records are accurate. They help in understanding the movement of cash and its relationships with other financial statements such as balance sheets, income statements, and cash flow statements.

accruals