Cash-basis accounting records revenues and expenses only when cash is received or distributed. Accrual-basis accounting, on the other hand, records revenues and expenses when they are earned or incurred rather than waiting until cash changes hands.

Double-entry accounting means that each time a transaction is recorded, there are at minimum two accounts impacted by the entry. In accrual accounting, the timing of revenues (when to record them) is governed by the revenue recognition principle.

accrual-basis accounting — an accounting system in which revenue is recorded or recognized when earned yet not necessarily received, and in which expenses are recorded when legally incurred and not…. cash-basis accounting — a method of accounting in which transactions are not recorded in the financial statements until there is an exchange of cash. revenue recognition — principle stating that a company must recognize revenue in the period in which it is earned; it is not considered earned until a product or service has been provided. net income — income earned when revenues and gains are greater than expenses and losses.