Compliance & Technical
What is Accrual Accounting?
Accrual accounting is the method of recording revenue when it is earned and expenses when they are incurred, regardless of when cash is actually received or paid.
Explanation
Accrual accounting is the standard for GAAP and IFRS financial reporting and provides a more accurate picture of a company's financial position than cash-basis accounting. It requires recording accruals at period-end: revenue earned but not yet billed (accrued revenue), expenses incurred but not yet invoiced (accrued expenses), and prepaid items that span accounting periods. The accrual process is document-intensive — it requires matching invoices to the periods they relate to and posting adjusting entries at month-end. Automation helps by ensuring invoices are processed and matched to the correct period as they arrive, reducing the accrual estimation required at close.
How Rima relates
Rima's extraction accuracy and period-tagging capabilities support correct accrual accounting by ensuring source documents are processed and matched to the right accounting period.
Learn about accounting automationRelated Terms
GAAP (Generally Accepted Accounting Principles)
The standard accounting rules and procedures used in the United States.
Journal Entry
A record of a financial transaction in the accounting system, showing which accounts are debited and credited.
Month-End Close
The monthly accounting process of finalizing all transactions, reconciling accounts, and producing financial statements.
Financial Reporting
The process of producing financial statements that communicate a company's financial performance.
See it in action
Rima automates the manual document workflows accounting teams spend hours on every week.