Accruals
Accruals are a form of accounting practice that can help to provide an more accurate representation of the economic condition of a project programme or organisation at the end of an accounting period or year.
Accruals are amounts that are unaccounted for, either because they are revenues earned or expenses incurred, that have not yet been recorded in the accounts. Recording, or estimating accruals enables an organisation to keep records of revenue and expenses that have not been received or incurred. This is particularly important in the construction industry where the supply chain is complex and extended, and invoices may not be paid for several weeks, or even months.
This differs from the cash method of accounting which involves the recording of revenue when it is received and the recording of expenses when they are paid. This raises the problem that revenue is not tied to the expenses that contributed to the generating of the revenue, which can make it difficult to identify the profitability of operations.
In the accrual method, income is reported in the year that the expenses that were incurred to generate that income have been paid. Expenses are reported only once goods and services have been delivered or provided.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
A briefing on fall protection systems for designers
A legal requirement and an ethical must.
CIOB Ireland launches manifesto for 2024 General Election
A vision for a sustainable, high-quality built environment that benefits all members of society.
Local leaders gain new powers to support local high streets
High Street Rental Auctions to be introduced from December.
Infrastructure sector posts second gain for October
With a boost for housebuilder and commercial developer contract awards.
Sustainable construction design teams survey
Shaping the Future of Sustainable Design: Your Voice Matters.
COP29; impacts of construction and updates
Amid criticism, open letters and calls for reform.
The properties of conservation rooflights
Things to consider when choosing the right product.
Adapting to meet changing needs.
London Build: A festival of construction
Co-located with the London Build Fire & Security Expo.
Tasked with locating groups of 10,000 homes with opportunity.
Delivering radical reform in the UK energy market
What are the benefits, barriers and underlying principles.
Information Management Initiative IMI
Building sector-transforming capabilities in emerging technologies.
Recent study of UK households reveals chilling home truths
Poor insulation, EPC knowledge and lack of understanding as to what retrofit might offer.
Embodied Carbon in the Built Environment
Overview, regulations, detail calculations and much more.
Why the construction sector must embrace workplace mental health support
Let’s talk; more importantly now, than ever.
Ensuring the trustworthiness of AI systems
A key growth area, including impacts for construction.