Definition

Accrual Accounting is a bookkeeping method that records income and expenses when they are earned or incurred — not when cash changes hands. It’s the required method for Corporate Tax and VAT in the UAE.

Key points

• Reflects a company’s true financial position.
• Recognizes accounts receivable and accounts payable.
• Required under IFRS for most UAE companies.

Practical example

A Dubai consulting firm invoices a client in December but receives payment in January. Under accrual accounting, revenue is recognized in December.

Why it matters

Ensures accurate profit measurement and compliance with FTA accounting standards.