Accrual Accounting

Revenue recognition determines when you officially record income. It separates cash in the bank from value delivered, giving a true picture of business health.

Deferred revenue is money received before services are delivered. It sits as a liability on your balance sheet until earned, requiring careful cash flow management and accounting discipline.

Accrual accounting records financial transactions when they are incurred rather than when money changes hands. It offers a more accurate view of startup performance than cash accounting.

GAAP provides the rulebook for financial reporting. This guide explains its importance to startups, compares it to cash accounting, and identifies when founders should implement these standards.