Accrual and cash basis are two different methods of accounting for taxes. Accrual basis requires income to be recognized when it is earned, regardless of when it is received. This means that income from a sale on December 31 can be recorded in the same year even if the customer does not pay until the following year. Cash basis requires income to be recorded when payment is received. This means that income from a sale on December 31 will not be recorded until the customer pays in the following year. Both methods have advantages and disadvantages, and businesses should consult a tax professional when deciding which method to use.