Accrual Basis Accounting

Definition

Records expenses when the obligation is incurred (service received) and revenue when earned (service delivered), regardless of cash movement. Required by GAAP/IFRS; the standard for any serious company.

Worked Example

$8,000 of AWS compute used in June; invoiced July 3; paid July 20.

Cash basis:     June expense $0,      July expense $8,000
Accrual basis:  June expense $8,000,  July expense $0

The servers powered June's customers, so the cost belongs to June.
Between June 30 and July 20 the $8,000 owed is a liability.

Interpretation & Pitfalls

Rule of thumb: expense follows usage; liability bridges the gap until cash moves.

In TupicFinance

All expense recognition follows accrual logic: Pay Later flows create the liability that bridges expense and cash.