Accrual Accounting
Accrual accounting is the recognition of revenues and expenses when a transaction occurs rather than when the eventual payment is received. The method is in line with the matching principle, which requires revenues and expenses to be recognized in the same period in which they are incurred. The purpose of this form of accounting is to match revenues and expenses to the time period in which they were incurred, as opposed to the timing of the actual cash inflows and outflows related to them.