What does accrual accounting primarily focus on matching?

Accrual accounting is based on the principle of recognizing economic events regardless of when cash transactions occur. This means that it focuses on the timing of when revenues are earned and when expenses are incurred, rather than when cash is actually received or paid. By matching revenues earned with expenses incurred in the same accounting period, accrual accounting provides a more accurate picture of a company’s financial performance. This enhances decision-making and allows stakeholders to see the true profitability and operational results of the business.

In contrast, focusing on documents with receipts relates more to cash accounting, where transactions are recorded when cash changes hands. Cash flows with sales overlooks the timing of when revenue is recognized against the expenses related to that revenue. Lastly, matching long-term assets with liabilities does not capture the essence of operational performance, as it mixes different types of accounts and does not directly reflect the relationship between income generation and the costs associated with it. Thus, the correct focus of accrual accounting is indeed on matching revenues earned with expenses incurred.