Accrual accounting is an accounting method that records financial transactions when they occur, regardless of when the payment associated with these transactions is received or made. In accrual accounting, revenues and expenses are recognized and recorded when they are earned or incurred, not when the payment is received or made. This method of accounting gives a more accurate view of a company's financial performance at a given time, rather than only reflecting cash inflows and outflows. It is widely used by businesses, government entities, and nonprofit organizations to manage finances and prepare financial statements.
