Cash Basis accounting is a method of bookkeeping that records income and expenses when money is actually received or paid out. Transactions are only recorded once cash changes hands and are not recorded if payment has yet to be received or if an invoice is outstanding. On the other hand, Accrual Accounting is an accounting method used to record revenue and expenses when they are incurred, regardless of when payment has been made or received. This means that invoices are recorded as soon as they are issued and payments are recorded as soon as they have been approved or accepted. In summary, Accrual Accounting better reflects the true financial position of a business at any given time. Ultimately, which method is chosen depends on the individual needs of a business.