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Definition: General accrual principle

National accounts

The system records flows on an accrual basis; that is, when economic value is created, transformed or extinguished, or when claims and obligations arise, are transformed or are cancelled.  Thus, output is recorded when produced, not when paid for by a purchaser, and the sale of an asset is recorded when the asset changes hands, not when the corresponding payment is made.  Interest is recorded in the accounting period when it accrues, regardless of whether or not it is actually paid in that period.  Recording on an accrual basis applies to all flows, monetary as well as non-monetary and intra-unit as well as between units.  However, in some cases it is necessary to show flexibility as regards time of recording.  This applies in particular to taxes and other flows concerning general government, which are often recorded on a cash basis in government accounts.  It is sometimes difficult to carry out an exact transformation of these flows from cash basis to accrual basis.  In these cases it might therefore be necessary to use approximations.  Any flow should be recorded at the same point of time for all institutional units involved and in all accounts in question.  This principle may seem simple, but its implementation is not.  Institutional units do not always apply the same accounting rules.  Even when they do, differences in actual recording may occur for practical reasons such as delays in communication.  Consequently, transactions may be recorded at different times by the transactors involved.  These discrepancies must be eliminated by adjustments.
Eurostat, "ESA 95 manual on government deficit and debt, 2002 Edition", Office for Official Publications of the European Communities, Luxembourg, 2002 Eurostat, "European System of Accounts - ESA 1995", Office for Official Publications of the European Communities, Luxembourg, 1996