What does accrual accounting primarily focus on?

Accrual accounting primarily focuses on recording revenues and expenses when they are incurred, regardless of when cash transactions occur. This approach provides a more accurate picture of a company's financial performance and position during a specific period. By recognizing revenues when earned and expenses when incurred, accrual accounting matches income and expenses to the period they relate to. This matching principle is essential for understanding how well a company is performing over time, as it allows stakeholders to evaluate profitability and make informed decisions based on all financial activity, not just cash transactions. Hence, option B correctly captures the essence of accrual accounting, distinguishing it from cash-based accounting methods, which focus solely on when cash flows in and out.