Film Accounting Glossary
Accrual
What is an accrual?
An accrual is a cost recorded in the period when it was incurred rather than when it is actually paid.
Production accounting runs on accruals because a shoot day generates obligations (crew wages, vehicle rentals, catering) long before the checks clear, and a cost report built only on cash paid would badly understate where the picture stands. Accruals are reversed when the real invoice arrives so the same cost is not counted twice.
Example
A Saturday shoot generates $46,000 in crew wages, meal penalties, and vehicle standby. Payroll will not process until Tuesday and the vendor invoices arrive the week after, so the accountant accrues $46,000 into the week it was earned, then reverses it when the real figures post.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Journal entries at every weekly cut-off. The gap between an accrual-based cost report and a cash-based one is usually a full week of spend.
Common mistake
Forgetting to reverse the accrual when the real invoice posts, which double-counts the cost. The second most common version is accruing an estimate and never revisiting it.
Related questions
- Why do productions use accrual accounting instead of cash?
- Because a shoot day creates obligations days or weeks before any money moves. A cash-based report would show a picture on budget while it is quietly running over.
- What happens if an accrual is not reversed?
- The cost is counted twice, once as the accrual and again as the invoice, so the department looks over budget by the accrued amount until someone finds it.