What characterizes the Accrual Basis of accounting?

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Under accrual accounting, revenue is recorded when it is earned and expenses are recorded when they are incurred, regardless of when cash is actually received or paid. This timing captures the economic activity of the period and supports matching costs to the revenues they help generate, giving a clearer view of profitability and financial position.

The description that matches this approach is recognizing income when earned and expenses when incurred no matter the cash movements. The cash-basis description fits only when cash is received or paid, which ignores earned revenue or incurred expenses timing. The mixed description—revenue when earned but expenses when paid—is inconsistent with accrual because expenses should be recognized when incurred, not when paid. The year-end-only description incorrectly implies timing tied to a single date rather than ongoing recognition.