Ever wonder what accrual accounting is and why do businesses do it? This accounting approach uses an accruing definition basis of accounting which recognizes revenue when earned and expenses when incurred, regardless of when cash is received or paid. Accrual based accounting provides a true picture of the company's accounting performance for a particular period. The abstract definition of accruing can assist business owners in grasping why income and expenses could be recorded in financial statements prior to receiving payment.