Under what circumstances would an accounting system using the accrual basis recognize income?

An accounting system using the accrual basis recognizes income when the sale is made, regardless of when cash is actually received. This principle aligns with the matching concept, which dictates that revenues should be recognized in the same period as the expenses incurred to generate those revenues. By recognizing income upon the completion of the sale, businesses can provide a more accurate representation of financial performance and condition. This approach allows for a clearer understanding of a company's earnings and operational success over a specific period, even if the actual cash flow occurs later.

Recognizing income when the sale is made captures economic activity more effectively than waiting for cash transactions, which can be delayed. For example, a company may sell goods or provide services on credit, leading to accounts receivable until payment is collected. This recognition of income at the point of sale enables better financial planning and reporting.