Accrual Accounting

Accrual accounting is a method of recording financial transactions when they occur, regardless of when cash is exchanged. This means that income is recorded when earned and expenses are recorded when incurred, rather than when payment is received or made. This approach provides a more accurate picture of a company's financial health, as it reflects all obligations and resources at a given time. It helps businesses track their earnings and expenses over time, making it easier to assess performance and make informed decisions. It's commonly used by larger businesses and required by accounting standards.