Under accrual accounting, if you invoice a client in December for work completed in December, you record the revenue in December — even if the client pays in February. The same logic applies to expenses. The FTA requires VAT to be accounted for on an accrual basis for most businesses above the mandatory registration threshold. UAE corporate tax filings are also prepared on an accrual basis under IFRS.
Pro tip: Cash-basis thinking is natural for founders, but it hides the true picture. A business that appears profitable on a cash basis can be technically loss-making on an accrual basis if it is not yet paying its bills.
See also: Revenue Recognition, IFRS, Bookkeeping
