In order to ensure that costs (and revenues) are allocated to the correct period, we use prepayments, accruals, accrued income and deferred income.
An accrual is where you have received a service, but not yet paid.
A prepayment is where you have paid for a service, but not yet received that service.
Deferred income is where you have been paid, but have not yet provided the service.
Accrued income is where you have provided a service, but not yet been paid.
Accrual = liability
Accrued Income = Asset
Prepayment = Asset
Deferred Income = Liability