It is easier to explain it with an example:
Company X pays its electricity bill every two months starting in January while the year end is 31st of December.
For the 2011 FY, electricity costs of $4,000 have been invoiced and paid but $500 costs incurred had not been received. The accounting entries for 2011 FY and 2012 FY are as follows:
Dr Electricity Expense $4000
Cr Cash $400
Dr Electricity Expense $500
Cr Accruals $500
2012: The invoice for the two months (December 2011 and January 2012) will be received in February or March but only one month will be relevant to the 2012 FY. In addition, the expense for the December has been already recorded so if it is recorded again, it will be double counted. So lets say that the invoice for Dec 11 and Jan 12 is received and the amount is $1,000 ($500 for each month).
The entries are as follows:
Dr Expense $1000
Cr Cash $1000
Dr Accruals $500
Cr Expense $500
The final entry is the reversal of the accrual for all accruals that were posted in the previous year.