SESKStuff Everyone Should Know
SESK: Stuff Everyone Should Know · sesk.info/biz-accrual-accounting-method

Under accrual accounting, when is income generally reported?

In the tax year the business earns it.

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  1. Only when cash reaches the bank
  2. Whenever the owner chooses
  3. When earned, even if paid later ✔

Why: Accrual accounting generally reports income when earned and expenses when incurred. Cash may arrive or leave in a different period.

Huh, didn't know that: Inventory rules can affect which accounting method a business must use.

The dad joke
Why did accrual accounting send an invoice? It had already earned the punch line.
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References

Answer: When earned, even if paid later. Accrual accounting generally reports income when earned and expenses when incurred. Cash may arrive or leave in a different period.

  1. IRS Publication 583, Starting a Business and Keeping Records www.irs.gov/publications/p583
    Under an accrual method, you generally report income in the tax year you earn it.
    Checked 2026-10-11.

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