Cash accounting and accrual accounting are two basic accounting methods that are essential for keeping records of expenses and income of a company (Zarandi, et al., 2013). In this essay, I will discuss the advantages and disadvantages of each method in order to conclude which accounting method is most useful for a business. Cash accounting is more favored, especially for small businesses, in which revenue is only counted when payment is received and expenses are practically paid, while the accrual method recognizes revenue when the sale takes place and expenses are counted when the goods or services are purchased. received, whether claims are literally received or payments are paid (Zarandi, et al., 2013). The accrual method of accounting is considered the most business-friendly and Zarandi, et al. (2013, p. 245) support this by summarizing their argument that the accrual accounting system is "understandable, reliable, comparable and relevant" and argue that the accrual method has become popular in the UK and that the reason is that the information obtained through accrual accounting fully reflects the overall impact "of management's actions or efforts on future cash flows relative to the realization of current cash flows of a given period”. So this clearly shows that the accrual method is more efficient, as shown by the results of Zarandi et al. (2013, p. 1) research shows that overall, the accrual method is better for “managing accounting affairs than the cash method.” On the other hand, (Adrianna and Alexandra, nd) are very critical of the above. the view that accrual accounting is preferable to cash accounting because cash accounting is more favorable...... middle of paper ...... especially small businesses. However, Linda (2007, p. 11) argues that cash accounting "does not match revenues and expenses to the actual period in which the transactions took place." This therefore becomes a disadvantage for cash accounting. On the other hand, Linda (2007, p. 11) asserts that accrual accounting can be considered a better alternative to cash accounting since this method, unlike cash accounting, "provides a best analytical tool because it closely matches revenues and expenses to the actual period.” in which the transactions took place". Although the accrual method of accounting is described by Linda (2007, p.11) as a "complex system of double-entry accounting", it provides a more accurate picture and information detailed information on a company's financial situation and performance, which is a crucial advantage as it produces valid and useful reports..