What is the main principle of accrual accounting?

The main principle of accrual accounting is the recognition of revenues and expenses in the period they occur, regardless of when cash transactions happen. This method aligns with the matching principle, which asserts that expenses should be matched with the revenues they help generate in the same accounting period. For example, if a company delivers a service in December but receives payment in January, the revenue from that service should still be recorded in December when the service was provided, not in January when the cash was received. This approach provides a more accurate financial picture and allows users of financial statements to assess the company's performance more effectively over time.

The other options do not align with the principles of accrual accounting. Recognizing revenues and expenses only when cash is received misrepresents the company's financial performance and condition, while asserting that expenses are always greater than revenues is not a fundamental principle of accounting. Finally, ignoring liabilities runs counter to the foundational concepts of accrual accounting, which requires all financial transactions, including obligations, to be properly recorded to present a complete view of the business's financial health.