Definition
Recording employee compensation expense before you actually pay it. It's how you match expenses to the right period and avoid accounting disasters.
Example Usage
We accrued $5M in payroll for work performed in December but paid in January, so our December expenses are accurate.
Origin
From the accounting principle of matching expenses to the period when work occurs
Fun Fact
Payroll accruals are basically magic—you record an expense you haven't paid yet, then pay it, and everything balances anyway.
Source: Accrual accounting methodology
Related Terms
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