Accrual Basis Accounting

The accounting method that keeps track of incurring expenses and revenues is called Accrual Basis Accounting. The direct opposite accounting method from this is called Cash Basis Accounting.

Accrual Basis Accounting strictly follows the Generally Accepted Accounting Principles, or GAAP for short.

Using this accounting method, items are recorded as expenses if debt owed to the company will be paid off at a later time. Expenses are the same way; items are recorded as revenue if another party will pay the company at a later time.