In accounting, what are cash and accrual examples of?

Cash and accrual are both recognized as accounting methods. These methods relate to how revenue and expenses are recognized in financial reporting. Under the cash method, revenues and expenses are recorded only when cash changes hands, meaning that transactions are recognized when they are actually received or paid. In contrast, the accrual method recognizes revenues when they are earned and expenses when they are incurred, regardless of when the cash transaction occurs. This distinction is crucial in accounting as it can significantly affect the financial statement outcomes and the financial health of a business being assessed.

Understanding these methods is fundamental for an assisted living administrator who needs to interpret financial data accurately for operational management and compliance with regulations. While each of the other options—financial statements, transaction methods, and reporting formats—relate to financial accounting, they do not specifically capture the essence of how income and expenses are recognized in the accounting cycle as cash and accrual do.