Accruals are needed when an unrecorded expense has been incurred or an unrecorded revenue has been earned.

Accruals

Accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.

Unrecorded Expense

A cost or liability that has been incurred but not yet documented or included in the financial records or statements of a company.

Unrecorded Revenue

Earnings from completed transactions or delivered goods/services that have not yet been documented in the financial accounts.