Accrual accounting is a method of recording financial transactions when they occur, regardless of when money actually changes hands. Under this system, revenue is recorded when earned (such as when taxes are assessed), not when the payment is received, and expenses are recorded when goods or services are used, not when the bill is paid. Canadian governments use accrual accounting because it provides a more accurate picture of financial health than cash accounting, which only tracks money as it comes in or goes out. For example, if a government commits to a $10 million infrastructure project in March but doesn't pay until July, accrual accounting records the expense in March.