First you must adjust your books to reflect the accrual method. It records expenses when it makes payments to suppliers. Cash Vs Accrual Basis Accounting Accrual Accrual Accounting If you use cash-basis accounting you wont record financial transactions until money leaves or enters your bank account. . Following the above example using accrual accounting if you invoice a client for 5000 in December of 2017 you would record that transaction as a part of your 2017 income and thus pay taxes on it. The indirect method is a method for creating a statement of cash flows a company may use during any given reporting period. What Is Cash Accounting. Both can be used in a range of situations from the accounts of a whole country or a large corporation to those of a small business or an individual. This choice has several implications for your business and in some cases requirements. Given its ease of use the cash basis.