Understanding Accruing in Accounting

Accruing means something that is accumulating or growing over time, often in a gradual or incremental manner. In the context of accounting, accruing refers to the process of recognizing and recording expenses or revenues as they become due or earnable, rather than when they are actually paid or received.

For example, if a company provides a service to a customer in December but does not receive payment until January, the company would accrue the revenue for the service provided in December in the month it was earned, even though the payment is not received until the following month. Similarly, if a company incurs an expense in December but does not pay it until January, the company would accrue the expense in the month it was incurred, rather than when it is paid.

Accruing can also refer to the process of recognizing and recording liabilities or assets as they become due or are earned, such as accrued vacation time or accrued interest on a loan. In this context, accruing refers to the gradual accumulation of these liabilities or assets over time, rather than recognizing them all at once when they are actually incurred or received.