Accrual basis is an accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is actually received or paid. This provides a more accurate picture of a company's financial position than cash basis accounting.
Cash Basis: An accounting method where revenue and expenses are recorded only when cash is exchanged.
Matching Principle: An accounting principle that dictates that companies report expenses at the same time as the revenues they are related to.
Generally Accepted Accounting Principles (GAAP): A set of rules and standards used in financial reporting that ensures consistency, reliability, and comparability of financial statements.