There are two major types:

• Cash Basis Method (used principally by farming businesses): This is what the name implies; you get income when you receive cash and you incur expenses when you pay the bill. Most service businesses operate on a cash basis because it is much simpler to understand and account for.
• Accrual Method: Here you match revenue with expense regardless when the cash may or may not be collected. If you sell a product to a customer and he doesn't pay you for 30 days, the sale is recorded in the books on the day that you made the sale. When the money comes in the "accounts receivable" is then turned into cash. The same with expenses: if you incur an expense on one month but don't pay until the next month, the expense will be recognized in the month in which you incurred the expense. If you're in manufacturing or deal with inventory,you will likely use the accrual method.