Retroactive accounting is done when you want to run the payroll for the period which is already Run. It means that suppose you have run the payroll August, September, October now due to some reason you are again running the payroll from September in the month of November. (Example: Company Management wants to give salary hike from the month of September). In this case, The Master data and Time Data changes for the Payroll period exited is called Retroactive Accounting.
Retroactive Accounting is used to carry forward your old month balance amount to the current Payroll run, if the user made any changes to the master data of the employee.