In the realm of finance and accounting, two primary methods for tracking and reporting financial transactions exist: accrual accounting and cash accounting. Each method has its own approach, benefits, and implications for investors and business owners, influencing how financial information is recorded and analyzed. Accrual accounting is a method that records financial transactions when they occur, regardless of when the actual cash exchange takes place. This means that revenues are recognized when they are earned, and expenses are recorded when they are incurred, even if the related cash flows have not yet been received or paid. The goal of accrual accounting is to provide a more accurate representation of a company’s financial health by matching revenues with the expenses incurred to generate them, offering a comprehensive view of profitability and financial obligations. For example, if a business provides services in December but does not receive payment until January, under accrual accounting, the revenue from the services would still be recognized in December, reflecting the period when the services were performed. Cash accounting, in contrast, records financial transactions only when cash changes hands. Revenues are recognized