Business and Personal Finance Dictionary

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• ACCRUAL CONVENTION
  
  Method used by investors for counting the number of days in each month and in the year. Also called accrual basis or day basis. The accrual convention is expressed in different ways. An accrual basis of 30/360 indicates that every month is treated as if it was 30 days long and a year is assumed to have 360 days. Accrual basis of actual/360 indicates that each month is treated using its actual number of days while a year is assumed to have 360 days. Day basis of actual/actual indicates that the true number of days for each month and year are used. The accrual convention is used in the calculation of the amount of interest payable on bonds, loans, deposits, and other financial instruments on the interest payment dates. This convention is also used for the purpose of calculating accrued interest due from a buyer to a seller of a security sold between interest payment dates.
  
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