How do I respond to this discussion post with sources and citations? Accrual accounting requires that revenues and expenses are recorded in the period in which they are earned or incurred, regardless of when cash is collected or paid. Two common types of accruals are accrued revenues and accrued expenses. Accrued revenues occur when a company has earned revenue but has not yet billed or received payment. For example, if a service is performed in December but the client is not billed until January, an adjusting entry is needed to record the revenue in December. The adjusting entry would debit Accounts Receivable and credit Service Revenue to recognize earnings in the correct period (Kimmel et al., 2021). Accrued expenses occur when a company has incurred an expense but has not yet paid or recorded it. A common example is salaries earned by employees at the end of the period that will not be paid until the next pay date. To ensure accuracy, an adjusting entry is made to debit Salary Expense and credit Salaries Payable. This records the expense in the period when the employees provided the work rather than when the cash is actually paid (Kimmel et al., 2021). If adjusting entries for accruals are not made, the financial statements will be misstated. Revenues may be understated if earned amounts are not recorded, which would result in lower net income. Likewise, expenses may be understated if incurred costs are not recognized, which would make net income appear higher than it a