cash basis accounting definition

cash basis accounting

Accounting method in which income is recorded when cash is received, and expenses are recorded when cash is paid out. Cash basis accounting does not conform with the provisions of GAAP and is not considered a good management tool because it leaves a time gap between recording the cause of an action (sale or purchase) and its result (payment or receipt of money). It is, however, simpler than the accrual basis accounting and quite suitable for very small firms which transact business mainly in cash.

cash basis accounting is in the Accounting & Auditing and Banking, Commerce & Finance subjects.

cash basis accounting appears in the definitions of the following terms: cash accounting, accrual basis accounting, change in accounting method, estimated revenue, accounting change and basis of accounting

cash basis accounting appears in these other term: modified cash basis accounting

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