Accrual and Redemption

Accrual refers to recording financial transactions when they occur, regardless of when cash is exchanged. For example, revenue is recognized when earned, not necessarily when received, ensuring financial statements reflect true economic activity. Redemption involves reclaiming or cashing in an investment or asset, such as selling mutual fund shares or exercising a bond. It transforms holdings into cash, often at current market value. Both concepts are fundamental to understanding how businesses and investments recognize performance and liquidate assets over time, providing accurate financial oversight and flexibility in managing funds.