Direct Answer
Cash accounting records revenue when money enters the bank and expenses when money leaves. Accrual accounting records revenue when an invoice is raised and expenses when incurred. Accrual is required for larger businesses globally to comply with GAAP/IFRS.
Why Accrual is Preferred
Accrual accounting obeys the "Matching Principle." If you sell a 12-month subscription in December, accrual recognizes 1 month of revenue this year, and 11 months next year (Deferred Revenue). Cash accounting recognizes the entire chunk immediately, distorting profitability.
Impact on Tax
Many jurisdictions allow small businesses to file tax on a cash basis to aid cash flow (so you don't pay tax on money you haven't received yet). However, once turnover exceeds statutory limits, you are forced onto the accrual basis.