Accrual Accounting Revenue Recognition is a business practice that requires companies to recognize revenue when it has been earned rather than when cash is received. This method of accounting allows businesses to accurately report the financial performance of their operations in a timely manner and ensures that the financial statements reflect actual sales and revenue numbers. Accrual Accounting Revenue Recognition involves recording payments as they are earned, instead of when they are paid. This method of accounting provides an accurate representation of a company’s current income, allowing decision makers to gain insight into the financial health of their organization.