For the business owner, being familiar with the accrual accounting system can prove useful when you want to have an accurate picture of your finances. Accrual based accounting recognizes revenue when earned, and expenses when incurred, whereas cash accounting does not. Well,what does accrual mean in the real world of business? It is the ability to record financial activity prior to the cash payment or receipt. Outstanding invoice, unpaid expenses and reported income also make more sense through learning what is an accrual.