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As a small business owner, you may be passionate about all aspects of developing your business, but it may not include accounting. There are two primary methods to recognize expenses you need to know: cash and accrual accounting methods. Even if you don’t work as an accountant, it is essential to know how each one works so you can choose the best bookkeeping practice for your business. Let’s take a look at both methods in detail, and how each one would affect your business. W

The cash basis and accrual basis of accounting are two different methods used to record accounting transactions. The core underlying difference between the two methods is in the timing of recording transactions. When aggregated over time, the results of the two methods are approximately the same. A brief description of each method follows: The Cash Method Revenue is recorded from the sale of goods or the performance of services in the year that payment is received, regardless