Final answer:
Businesses using the accrual method of accounting recognize income when they meet the all-events test, which is when all conditions are satisfied to firmly establish the right to income.
Step-by-step explanation:
Businesses using the accrual method of accounting generally recognize income when they meet the all-events test. This accounting principle dictates that income is recognized when all the events have occurred that fix the right to receive the income, and the amount can be determined with reasonable accuracy.
For example, if you are on a salary and receive a paycheck at the end of each month, the period is monthly and the frequency is once a month. In this case, your employer is recognizing the expense of paying you when the work is performed, rather than when the cash is actually paid out, which is the essence of the accrual method.