What is true up meaning?

True-up is a term used in accounting and business that refers to the process of making adjustments or corrections to accounts based on actual results.

In general, true-up is used to reconcile the differences between the estimated or projected amounts that were used to create a budget or forecast, and the actual amounts that were incurred or earned during a specific period.

True-up can be used in various contexts, such as revenue recognition, inventory valuation, expense accruals, or tax calculations. For example, a company may true-up its revenue recognition at the end of a fiscal year by adjusting its sales figures to reflect any changes in customer contracts, return rates, or discounts that were not accounted for initially.

True-up can also occur in financial transactions, such as mergers and acquisitions, where the buyer and seller need to reconcile their financial statements to determine the final price and allocation of assets and liabilities.

Overall, true-up helps ensure the accuracy and consistency of financial records, which is important for making informed business decisions, complying with regulations, and communicating the financial performance of a company to stakeholders.