Accrual Accounting
Definition
An accounting method that records revenue when earned and expenses when incurred, regardless of when cash changes hands. Required by GAAP for most businesses above a certain size. Contrasts with cash-basis accounting.
Related Terms in Core Accounting
Balance Sheet
A financial statement showing what your business owns (assets), owes (liabilities), and the owner's stake (equity) at a specific point in time. Assets = Liabilities + Equity. HelloBooks generates balance sheets automatically from your transactions.
Bank Reconciliation
The process of matching your accounting records to your bank statement to ensure they agree. HelloBooks AI auto-categorizes and matches transactions from 11,000+ banks via Plaid, reducing reconciliation from hours to minutes.
Cash Flow Statement
A financial report showing how cash moves in and out of your business through operations, investing, and financing activities. Essential for understanding whether your business generates enough cash to cover expenses.
Chart of Accounts (COA)
An organized list of every account used to record financial transactions in your general ledger. Categories include assets, liabilities, equity, revenue, and expenses. HelloBooks creates a standard COA automatically when you set up your entity.
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