Cash basis accounting is a method of accounting where all income and expenses are reported when they are actually received or paid. This means that any money paid out of the business during an accounting period, such as wages, bills, etc., will appear on the balance sheet at the end of that period. Similarly, any money received into the business during that period, such as invoice payments, would also be added to the balance sheet.

On the other hand, accrual basis accounting recognizes revenue or expenses when the transaction occurs, regardless if cash was formally exchanged. This means that if a customer placed an order for goods or services with your business in the current accounting period but had not yet paid for them, the amount owing by that customer would still be listed on the balance sheet of that period.