Cash basis accounting is an accounting method that recognizes revenue and expenses when cash changes hands. It is the simplest form of accounting, as it requires very little effort to keep track of, and can be used by small businesses that mainly deal with cash transactions. On the other hand, accrual basis accounting is a method of accounting which recognizes economic events regardless of when the associated cash flows occur. This system allows businesses to better match their income and expenses to the proper period, and gives them a much more accurate picture of their financial performance.