Accounting Cash Basis and Accrual are two methods of tracking a business’s financial performance. The Cash Basis method records all income and expenditure when money is actually received or paid out. This means that expenses appear after cash has been spent, and income appears when cash has been received. In contrast, the Accrual method records income and expenditure when they are earned and incurred respectively, regardless of when the payment is made or received. This method allows businesses to track their performance in real-time, as well as providing an accurate picture of future liabilities and obligations.