What does accrual accounting primarily aim to match in financial reporting?

Accrual accounting primarily aims to match revenues and expenses in financial reporting. This method recognizes revenue when it is earned, regardless of when the cash is received, and expenses when they are incurred, regardless of when they are paid. This matching principle allows for a more accurate representation of a company's financial performance over a specific period, as it aligns income earned with the costs incurred to generate that income.

By focusing on revenue and expenses, accrual accounting provides stakeholders with a clearer picture of the organization's profitability, as it reflects the financial activity that has occurred during the reporting period rather than merely what cash transactions have taken place. This is particularly important in the health care sector, where services may be rendered but payment received at a later date, necessitating a method that accurately depicts the ongoing economic activities of the organization.