Definition
An accounting method that records income and expenses when they're earned or incurred, not when cash actually changes hands.
Accrual accounting records financial activity when it happens — revenue when it's earned and expenses when they're incurred — regardless of when cash moves. It contrasts with cash accounting, which records only when money is actually received or paid.
Accrual gives a more accurate picture of an HOA's true financial position, including money owed (like unpaid dues) and obligations not yet paid. Many governing documents or state rules specify which method an association must use, or require accrual-based reporting for audits and reserves.