Answer:
The accruals principle states that companies should recognize revenue in the financial statement when they earn that revenue, and they should recognize expenses when they introduce (better) incur those expenses.
Explanation:
This principle goes with the matching principle, which states that expenses should be matched to the revenue that they generate and vice versa. This implies that revenue should not be recognized in an accounting period when its associated expenses are recognized in another. They should be recognized together in the same period in order to ascertain financial performance.
