Accrual concept means:

**The reasoning** The **accrual concept** is one of the fundamental accounting principles. It says: record income when you *earn* it and expenses when you *incur* them — not when cash changes hands. Think of it this way: If you sell goods in December but the customer pays in January, you record the revenue in December (when you earned it). If you use electricity in December but pay the bill in January, you record the expense in December (when you incurred it). This matches revenues to the expenses used to generate them **in the same period**, giving a true picture of profit for that time. **Why the wrong options tempt you** - **A (Cash basis)** is the opposite — recording only when money moves. It's simpler but doesn't match revenue to the period earned. - **C (Ignore expenses)** sounds absurd, but under pressure, students might confuse accrual with only focusing on revenue. - **D (Year-end only)** is wrong because accrual applies to *every* accounting period (monthly, quarterly, yearly). **Quick takeaway** Accrual = "Record when earned or incurred, not when cash moves" — it matches revenue and expenses to the RIGHT period for accurate profit measurement.