The Accrual Method of Accounting matches revenues when they are earned against expenses associated with those revenues. Under accrual accounting, if your business receives a bill, that bill is counted as an expense, even though you have not yet paid the bill. In the same way, if you bill a customer, that bill is counted as income, even though you have not yet received payment.
Accrual accounting is most often used in companies which manufacture or resell products.
The other choice for accounting method is cash accounting.
