Accrual accounting method is an accounting system which measures and records financial transactions not according to when the money is received or paid out, but rather when a transaction takes place. This method allows businesses to accurately track the flow of their finances in real time, giving them greater insight into the financial standing of their business. It also makes tax filing simpler, since income and expenses are reported during the period they were earned or incurred, rather than when payment was made or received. Accrual accounting also helps to better identify trends in cash flow and make more accurate predictions about the future of a business. This method of accounting is essential for running an effective, profitable operation.