When someone mentions accounting methods, they are referring to the set of rules that their company uses to decide when its revenue and expenses are recognised in its book of accounts.
There are two main types of accounting methods that dictate these rules for businesses: accrual accounting and cash accounting.
Each of these two methods comes with a distinct set of rules on when to use it and how. Which one you decide to use will depend upon your company’s needs and requirements.Which accounting method should your small business choose?
First, let’s lay out your options.