Accrual Accounting is a method of accounting that records revenues and expenses when they are earned or incurred, regardless of when cash is actually exchanged. This approach provides a more accurate picture of a company's financial position, as it reflects all financial activities during a specific period. Under Accrual Accounting, businesses recognize income when a sale is made or a service is provided, and expenses when they are billed, even if payment occurs later. This method is commonly used by larger companies and is required by Generally Accepted Accounting Principles (GAAP) for financial reporting.