How is accrual and accounting different?
How can one differentiate between accrual and accounts payable? Please explain this, I have been confused
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Are you asking the difference between accrual and cash basis accounting?
Accruals are typically related to SGA expenses and Accounts Payable are related to inventory/COGS.
This is a good answer.... an example of SG&A would be be marketing expenses. Take a a retail website for example, the photo shoot and retouching may be done weeks in advance, but the expense wouldn’t be recognized until those assets are live on the site. In this instance, you’d be sitting on those invoices (or paying, depending on terms) but wouldn’t need to accrue them. On the flip side, digital media spend may not be invoiced for some time after the ads have been live, you’d want to accrue upfront to account for that invoice and then it would reverse upon processing.
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