Business: Cash Versus Accrual Counting

The cash method and accrual method are two separate ways of counting that each have their own unique advantages. But what are they? Well, under the Cash Method of accounting, sales are recorded when cash is received, and expenses are recorded when cash is sent out. It's simple and straightforward, but it isn't always completely accurate. For example, if you payed three months of rent in one month and your sales were exactly same as the other two months, it would still show that you did a lot worse that month than the other two. Under the accrual method of accounting, however, revenue is recorded as soon as services are provided or goods are delivered, not regarding when the cash is received. These two methods have their own advantages-the cash method is quick and simple, but sometimes inaccurate, while the accrual method is more accurate but takes longer.