The recording of financial activities in a business is essential in making sure accurate information is provided for decision making. Zafirakis (2005:4) states that "Accrual accounting is the cornerstone of modern accounting procedures." In this essay, the importance of accrual accounting will be considered by looking at how it functions in the Double Entry System and comparing it to cash accounting, another method of gathering financial information. Time and an accurate accounting measurement is what will be considered in determining the importance of accrual accounting.

Double-entry accounting is used to develop accounting data. From this data, we can determine the performance of a business by calculating its profit, revenues - expenses. Juchau et al (2004:F146) states that "double-entry accounting is necessary for the accounting equation to be kept in balance." That is the five types of accounts, Assets, Liabilities, Equity, Revenues and Expenses must equate:

Assets = Liabilities + Equity + Revenues...