What does the accrual accounting method measure?

The accrual accounting method is designed to measure a company's performance by recognizing revenue and expenses when they are incurred, rather than when cash is exchanged. This approach provides a more comprehensive view of a company's financial health since it includes accounts receivable and accounts payable, reflecting economic events as they occur.

When using accrual accounting, transactions are recorded in the period they happen, which offers a clearer picture of income and expenses during that timeframe, regardless of actual cash movement. This method allows stakeholders to understand how well the company is performing operationally, as it captures all economic activities within the reporting period, not just those involving cash.

In contrast, the other options focus on narrow aspects of financial reporting. For instance, measuring only cash transactions would provide a limited view that doesn't account for credit sales or incurred expenses that have not yet been paid. Assessing overall capital asset value ignores the ongoing operations and performance of the business. Meanwhile, focusing solely on profitability based on cash flow overlooks important earnings that might not yet be realized into cash but still contribute to the company's financial performance. Thus, option C captures the essence of accrual accounting and its focus on comprehensive performance measurement.