Cash accounting records revenues when cash is received and records expenses when cash is paid. Accrual accounting records revenue and expenses when they are earned or incurred, not when the cash is received or paid. For instance, say a customer buys a large order of wholesale cannabis on 12/1, but it does not get shipped and delivered until 1/1, which is when you get paid. In cash accounting, you would not record the purchase until 1/1 when the customer receives the goods and pays. In accrual accounting, you would record the revenue on 12/1 when the order is first placed. The benefit of accrual accounting is that it gives a more complete picture of liabilities and assets, not dependent on cash. It can show the full picture if there is a lot of money owed (expense) or if there has been a large order placed (revenue). Generally accepted accounting principles (GAAP) mandates accrual accounting.