Final answer:
Accrual accounts are used in the accrual basis financial statements of the federal government, reflecting transactions based on when they are incurred. This method is integral to how the government plans its budget, ensuring tax revenues and expenditures align with their designated policies and fiscal periods.
Step-by-step explanation:
The accounts that comprise the accrual basis financial statement prepared by the federal government and its agencies are called accrual accounts. These financial statements reflect transactions when they are incurred rather than when cash is exchanged. This accounting method matches revenues to the time periods in which they are earned and recognizes expenses in the period when they are incurred, which is in contrast to the cash basis accounting that records transactions only when cash changes hands. The federal government's budget, which includes both anticipated receipts and expected expenditures, sets the policies for the upcoming fiscal year. The budget allocates funds for services and programs, and the related transactions are recorded in the accrual accounts. These transactions include tax revenues, which are used to finance federal services and programs, and federal expenditures, which benefit both state and local governments.