Cash versus accrual is a term used to describe how businesses keep track of their profits and expenses. Through cash accounting, businesses only record transactions when money has been physically exchanged. With accrual accounting, businesses recognize revenues and expenses when the transaction occurs, regardless of when the money was exchanged. The difference between these two models can have a big impact on a company’s reported profit or loss for a given financial period. When deciding which approach is best for your business, it’s important to consider the tax consequences and potential impacts on financial statements.