This video is a very basic explanation of accrual accounting. That is what we are already doing but you need to understand why and how to recognize it. This section of our class discusses the recognition of revenues and the recognition of expenses. Make up a story to demonstrate the same concept, that the business looks different if we only recognize things when cash changes hands.

https://youtu.be/aPwdgUDXkkE

 

Then, explain the difference between recognizing revenue and realizing it. How does the Accounts Receivable account play into this?