Accrual Method .

The Accrual Accounting Method is a bit more complex.

Under this method, the focus in on the date the expense is incurred, not paid. Although this may seem a small difference, it can play havoc with your books and piece of mind.Using our previous example, assume I order business cards and stationary on the July 18, 2009. I receive the products on December 30th, but don’t pay the invoice until January 20, 2009. When can the expense be claimed? It depends on when economic performance occurred.Generally, economic performance occurs when goods or services are provided to you. In the above example, economic performance would arguably occur when the business cards and stationary were delivered with the invoice on December 30th. Thus, I would be able to deduct the expense for the 2009 tax year.