Accrual accounting aligns revenue when earned and expenses when incurred. Master the Timing Matrix by sorting year-end adjusting scenarios!
Scenario: 1/6
Score: 0
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Cash timing vs Service timing.
Period Closed & Adjusted!
Score:
Lesson: The Timing Matrix
• Deferrals (Cash First): Cash changed hands before the service was rendered or consumed. Postponed until time passes (Prepaid Rent, Unearned Revenue).
• Accruals (Action First): Work was performed or costs consumed before any cash moved. Recorded now with a receivable or payable (Unpaid Wages, Unbilled Revenue).
Memory Hook:Deferral = Delayed recognition of revenue/expense. Accrual = Action occurred now; cash comes later.