Modelling the accruals process and assessing unexpected accruals*

Table 2: Summary of Accruals Components
Accrued Component
(if t superscript is less
than the t subscript, i.e.,
income recognition
precedes cash flow
realization)
Deferred Component
(if t superscript is more
than the t subscript, i.e.,
income recognition
supersedes cash flow
realization)
Initiation at period t
(if either the t superscript or the t
subscript has a “+” sign, i.e., an
item is initiated in period t and
reversed in period t+i)
t
CNIt i
t i
CFt
Reversal at period t
(if either the t superscript or the t
subscript has a “-” sign, i.e., an
item was initiated in period t-i
and reversed in period t)
t i
CFt
t
CNIt i
Table 2 summarizes the four accruals components depending on whether they are an accrued or deferred component
or whether they are an initiation or reversal component.
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