Accrual accounting helps to more accurately track revenues and expenses. With accrual accounting, you record all transactions in the books when they occur, even if no cash changes hands.
Cash-basis accounting does a good job of tracking cash flow, but it does a poor job of matching revenues earned with money laid out for expenses. This deficiency is a problem particularly when, as it often happens, a company buys products in one month and sells those products in the next month.
