Accounting is the process of recording, classifying, and summarizing financial transactions in order to provide accurate financial information that can be used to make important decisions. There are two common methods of accounting: cash basis and accrual basis. Cash basis accounting records transactions when they occur and payments or receipts become available. Accrual basis accounting, on the other hand, records transactions when they happen and not when the money changes hands. This method provides a better picture of an entity’s overall financial position at any given time. By understanding the difference between these two accounting methods, organizations are better equipped to make smarter business decisions.