Accrual Accounting in Finance: Accrual accounting is a fundamental accounting method that records revenues and expenses when they are earned or incurred, regardless of when cash transactions occur. This method provides a more accurate picture of a company’s financial health by recognizing economic events in the period they occur. It contrasts with cash accounting, which records transactions only when cash changes hands. Accrual accounting is essential for businesses to comply with generally accepted accounting principles (GAAP) and provides stakeholders with a clearer view of the company’s financial position and performance over time.