Accrual Basis

The accrual basis records revenues and expenses at the moment they occur, regardless of when cash actually changes hands. This generates payable or receivable balances that represent outstanding obligations until the money moves.

When the cash does move — whether as a full settlement or a partial installment — a separate transaction records that payment.

Example — a printing company

A printing company buys paper from a supplier and sells folders to a client, both on credit.

The accounts

The book needs accounts that track the cash position, the counterparties, and the goods involved.

Recording the purchase

The company buys printing paper on credit, then pays the supplier later. Two transactions capture this:

Date	Amount	From Account		To Account	Description
05/07	3,000.00	Supplier	>>	Paper	Printing Paper A4 300
31/07	3,000.00	Bank Account	>>	Supplier	Payment

Recording the sale

The company sells folders on credit, then receives the payment from the client:

Date	Amount	From Account		To Account	Description
12/07	300.00	Folders	>>	Client	100 Color foldable Folders
31/07	300.00	Client	>>	Bank Account	Payment of the 100 Folders

Note

With the accrual method you can track receivables and payables — obligations that remain visible in your balances until settled. This is not possible with the cash basis method, which only records transactions when money moves.