Accrual accounting
Definition · Level 9 · Valuation
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Recording revenue when earned and costs when incurred, regardless of when cash changes hands — the reason profit and operating cash flow differ.
Example
Ship on 60-day terms: revenue now, cash in two months (a receivable meanwhile).
Where Tradecraft teaches it
Level 9 · Valuation, in the lesson “Balance sheet, cash flow and how they link”: Assets = liabilities + equity, the three cash-flow sections, free cash flow, and why profit isn’t cash.
Related terms
- AssetsResources a company owns or controls that should bring future benefit — cash, receivables, inventory, PP&E, intangibles.
- Balance sheetA snapshot on one date of what a company owns, what it owes and the owners’ residual claim — always satisfying assets = liabilities + equity.
- CapexCapital expenditures: cash spent on long-lived assets such as plants, equipment and servers.
- Cash-flow statementReport of the cash that actually moved in and out over a period, in three sections — operating, investing, financing — whose sum (plus any currency…
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- CFOCash flow from operations: under the indirect method, net income plus non-cash charges (D&A, stock comp), adjusted for changes in receivables…