What does accrual mean?
Accrual is a noun describing the gradual accumulation of something over time—most often money, interest, debt, or employee benefits. It is a staple of financial and legal language: an interest accrual is the amount that builds up on a loan or deposit between payments, while vacation or pension accrual refers to leave time employees earn progressively as they work. In accounting specifically, accrual names both individual entries and the broader method known as accrual accounting or the accrual basis, under which revenues are recorded when they are earned and expenses when they are incurred, regardless of when cash actually moves. This contrasts with cash-basis accounting, which recognizes transactions only when money changes hands. The word derives from the verb accrue, ultimately from Latin crescere, meaning to grow. Formal and technical in tone, accrual rarely appears in casual conversation but is indispensable wherever finances unfold gradually rather than instantaneously, making it a valuable term for understanding contracts, payroll, and financial statements.
nounThe gradual accumulation or increase of something, especially money, interest, benefits, or expenses over time. In accounting, an amount recognized as earned or incurred in a given period even though it has not yet been paid or received.
- The gradual accumulation of something—especially money, interest, benefits, or liabilities—over time.
- (Accounting) An expense or revenue recognized when it is incurred or earned rather than when cash changes hands; also the method (accrual accounting/basis) based on this principle.
"Interest accrues daily on the loan, and the accrual is added to the balance at the end of each month."
"Employees earn vacation days through a monthly accrual of paid leave."
"Under the accrual basis of accounting, the company recorded the December revenue even though payment arrived in January."
Commonly used in the plural in accounting contexts to refer collectively to accrued items such as accrued expenses or accrued revenues.
"At year-end, the accountant recorded several accruals for services received but not yet invoiced."
In accrual accounting, you can owe taxes on money you've technically earned but never actually touched.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Etymology of accrual
Accrual derives from the verb accrue, which entered English from Anglo-Norman French acreu, the past participle of acroistre, ultimately from Latin accrescere, 'to grow' — formed from ad- ('toward') plus crescere ('to grow'). English use of accrue dates to around the late fifteenth or early sixteenth century, with the noun accrual developing later as a derivative form. The same Latin root gives English words like increase, decrease, concrete, and crescent, all carrying the sense of growth.
Related word forms
How accrual is actually used
Accrual belongs chiefly to formal registers: finance, law, human resources, and accounting. Outside these contexts it can sound jargonistic, where words like buildup or accumulation are more natural.
Easily confused with accrual
Accrue is the verb meaning to accumulate over time, while accrual is the noun naming the accumulated amount or the process itself.