Accounting methods are the ways a business can choose to account for certain financial events. The two main types of accounting methods are Cash and Accrual. The cash method tracks income and expenses when they are actually received or paid, while the accrual method records income and expenses when the transaction is made and not necessarily when it is paid. For example, if a company buys inventory with the intention of selling it in the future, under the accrual method, the company would record the expense as soon as the purchase is made, instead of waiting until the money is actually spent. By understanding how each of these methods works, businesses can make educated decisions about which one is most beneficial to use.