Cash accounting records revenue and expenses when money actually moves. Accrual accounting records them when they're earned or incurred, regardless of when cash changes hands.
Say a company invoices a customer in December but doesn't get paid until January. Accrual accounting recognizes that revenue in December; cash accounting waits until January. The same logic applies to expenses: a bill received in one month but paid the next.
Cash accounting is simpler and fine for a lot of very small businesses, but it can paint a misleading picture of a growing company's actual performance, since revenue and expenses land in whatever month the cash happens to move rather than the month the work happened. GAAP requires accrual accounting, and it's what investors and acquirers expect to see, which is part of why most venture-backed startups move to accrual books well before they're required to.
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