Guides accounting for expenses, ensures that all expenses are recorded when they are incurred during the period, and matches those expenses against the revenues of the period. An accounting year of any twelve consecutive months that may or may not coincide with the calendar year. Accounting method that records revenues when earned and expenses when incurred. Requires companies to record revenue when it has been earned and determines the amount of revenue to record. Assumes that a business's activities can be sliced into small time segments and that financial statements can be prepared for specific periods, such as a month, quarter, or year. Accounting method that records revenue only when cash is received and expenses only when cash is paid.