Accounting
Accrual vs. Cash Accounting
Quick definition
Accrual recognizes revenue/expense when earned; cash when money moves.
Accrual accounting recognizes revenue when earned and expenses when incurred — regardless of cash timing. Cash accounting records them when cash moves. GAAP requires accrual. Investors, auditors, and lenders expect accrual-basis financials.
Related accounting terms
Frequently asked questions
- What is Accrual vs. Cash Accounting?
- Accrual accounting recognizes revenue when earned and expenses when incurred — regardless of cash timing. Cash accounting records them when cash moves. GAAP requires accrual. Investors, auditors, and lenders expect accrual-basis financials.
- Why is Accrual vs. Cash Accounting important for startups?
- Accrual vs. Cash Accounting is a accounting concept that matters for startup founders because it directly affects fundraising readiness, financial decision-making, or operational discipline at the stage where mistakes are expensive to undo. Founders who understand it have a meaningfully easier time in diligence, board meetings, and investor conversations.
- What category does Accrual vs. Cash Accounting belong to?
- Accrual vs. Cash Accounting is a Accounting term in the StartupCFO finance glossary — alongside other accounting concepts that founders, CFOs, and accountants use in daily startup operations and reporting.
- Where can I learn more about Accrual vs. Cash Accounting?
- Beyond this definition, see the related accounting terms below, or explore StartupCFO's insights and tools that put Accrual vs. Cash Accounting in context. For specific situations, talk to a fractional CFO who can walk through your numbers.
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