What type of accounting records expenses and income in each fiscal period regardless of when they are paid or collected?

Accrual accounting is the correct choice because it recognizes income and expenses at the time they are earned or incurred, not necessarily when cash transactions occur. This method allows for a more accurate picture of a company's financial position by matching revenues with expenses in the period in which they are incurred. For instance, if a service is rendered in one fiscal period but payment is received in another, the revenue is recorded in the period when the service was provided, reflecting the true financial activity.

In contrast, cash accounting records income and expenses only when cash is actually exchanged. This method provides a clear view of cash flow but can misrepresent financial health if significant accounts receivable or payable exist.

Deferred accounting deals with revenue or expenses that are recorded before the actual cash flow occurs, often resulting in prepaid expenses or unearned revenue.

Budgetary accounting focuses on creating a plan for expenditures and income but does not inherently reflect the timing of when those transactions occur relative to fiscal periods.