What does the accruals concept in accounting state about recording expenses and revenues?

The accruals concept in accounting emphasizes that expenses and revenues should be recorded in the period they occur, regardless of when cash is received or paid. This principle underlies the basis of accrual accounting, which aims to match income and expenses to the time periods in which they are incurred. By doing so, it provides a more accurate representation of a company's financial position and performance.

For instance, if a company provides a service in December but doesn’t receive payment until January, under the accruals concept, the revenue from that service would still be recorded in December's financial statements. This approach aligns with the revenue recognition and matching principles, ensuring that financial statements reflect all economic activity within the relevant time frame, thus offering a clearer view of profitability and financial health.