Accrual of income occurs when a right to receive arises and a corresponding liability is created, distinct from receipt.

Accrual and arise denote a state anterior to receipt indicating a right to receive; accrual connotes accumulation while arise denotes coming into existence in a tangible form. Accrual occurs when the assessee obtains a vested right and a corresponding liability of the payer arises. Postponement of payment does not affect accrual and non-receipt does not extinguish an accrued right, though non-receipt may affect entitlement to deductions. The statutory scheme treats receipt and accrual under distinct provisions.

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