Cash and accrual accounting are two basic accounting methods essential for keeping track of a business's expenses and revenues (Zarandi, et al., 2013). In this essay, I will discuss the advantages and disadvantages of each method to conclude which accounting method is most useful for a business. Cash accounting is more popular especially for small businesses where income is only counted when payment is received and expenses are practically paid, while the accrual accounting method accounts for revenue when the sale occurs and expenses are counted when goods or services are sold. received regardless of whether credits are literally received or payments are paid (Zarandi, et al., 2013). The accrual accounting method is considered the most favorable for businesses and Zarandi, et al. (2013, p. 245) support this by summarizing their argument that the accrual system is “understandable, reliable, comparable and relevant” and argue that the accrual method has become popular in the UK and the reason is because the information obtained from accrual accounting provides a complete reflection of the overall impact of "managerial actions or efforts on future cash flows compared to cash flow realizations in a given period". So this clearly shows that the proficiency method is more effective as demonstrated 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 accounting method.” On the other hand, (Adrianna and Alexandra, n.d.) are very critical of the above idea that accrual accounting is preferable to cash accounting since cash accounting is more favorable… middle of paper ...particularly in small businesses. However, Linda, (2007, p.11) argues that cash accounting “does not match income and expenses to the actual period in which the transactions occurred.” Therefore this becomes a disadvantage for cash accounting. On the other hand, Linda (2007, p.11) states that accrual accounting can be seen as a better alternative to cash basis since this method, unlike cash accounting, "provides a better analytical tool because it combines strictly income and expenses to the actual period in which the operations occurred". Although the accrual accounting method has been described by Linda (2007, p.11) as a "complex double-entry accounting system", it provides a more accurate picture and detailed information about a company's financial position and performance which is crucial, therefore an advantage as it produces valid and useful reports.