Accruals

1. Fundamental accounting concept, also known as the matching concept. Revenue and costs are credited or charged to the profit and loss account for the year in which they are earned or incurred, not when any cash is received or paid. For example, if a sale is made on credit this year, but the cash is only received next year, the sale is treated as income in this year.
2. Amounts owed to third parties for which the company has not yet been invoiced. This is shown in the balance sheet of a company as part of creditors. For example, where a company has not been invoiced by a telephone company for its telephone bill for the last three months of the year, it will show in its accounts an accrual for the estimated amount of the bill.
3. The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitrage) deals, over the period of each deal.