How do commercial bank utilize accrual and cash basis accounting?

Commercial banks primarily use accrual accounting to recognize income and expenses when they are earned or incurred, rather than when cash is exchanged. This method allows banks to match revenues from interest and fees with the corresponding expenses, providing a clearer picture of financial performance. Cash basis accounting is less commonly used in banking, as it can distort financial reporting by delaying the recognition of income and expenses until cash transactions occur. However, certain smaller financial institutions or specific reporting scenariOS may still apply cash basis accounting for simplicity or regulatory reasons.