Accrual Method

HSM 260 Financial Management for Human Services Managers

Accrual Method

The accrual method records the transaction even before the organization has received the money for the services. The accrual method works the best for nonprofits organizations then profit organizations.

For example, if the organization supplying a service records the cost of the services, and does not wait until they receive the money for the services rendered.

The accrual method shows an organizations debt and income more accurately then in cash basis accounting. In accrual method, revenue is not equal to cash, because a cash account has to have a receipt to match the amount of money recorded in the books as a transaction. In an accrual method, the revenue occurs when the money...