This is not meant to be a treatise on accounting, which would put most people to sleep, but you should know the various methods before electing.

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So what is an accounting method?  It is basically the way income and expenses are recognized.  There are two basic methods, Accrual and Cash.  However, there are also several "hybrid" approaches, only one of which we will discuss on this website, mark-to-market accounting.

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Accrual - is used by most larger businesses; Income is reported as it is earned and invoiced while expenses are reported as they are incurred, both of which are independent of cash changing hands.

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Cash - is used by small to medium-sized businesses that do not carry inventory, although there are exceptions to that as well.  Essentially it is accounting using one's checkbook ... as cash is received, for the most part it is recorded as income and as cash is expended it is recorded as an expense.

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Mark-to-Market - is used in several situations, typically in securities and commodity trading.  As a dealer in securities it is required but as a trader in securities, it can be elected.  It entails "marking to [fair] market [value]" at year-end all securities held at that time.  Any differences are recognized for tax purposes.  Therefore, if there is a loss, a tax benefit may be obtained whereas if there is a gain that can work out to be a tax detriment in that tax is owed but the securities held have yet to be monetized (actually sold for cash).