Accounting methods refer to the techniques used by businesses to record and report their financial transactions. The two primary methods are the cash basis and accrual basis. The cash basis recognizes income and expenses only when cash is exchanged, making it simpler for small businesses. In contrast, the accrual basis records income and expenses when they are earned or incurred, regardless of cash flow, providing a more accurate financial picture. Choosing an accounting method affects financial statements and tax reporting. Businesses must consistently apply their chosen method and may need to consult with an accountant to ensure compliance with Generally Accepted Accounting Principles (GAAP) or other relevant regulations.