Accrual Accounting: Accrual accounting is a method of tracking financial transactions by recognizing income and expenses when they are earned or incurred, regardless of cash movement. This approach provides a comprehensive overview of a company’s financial status, capturing long-term trends and obligations.
Cash Accounting: Cash accounting involves recording income and expenses exclusively when cash transactions take place. While this method offers a straightforward way to monitor immediate cash flow, it might not present a holistic picture of the company’s financial health or commitments.
