cash basis accounting investment & finance definition
An accounting system that records income when it
is received and records expenses when they are paid. In contrast, the most
common account method records income when it is earned and expenses when they
are incurred.
See cash basis accounting in Wall Street Words
A method of accounting in which the receipt and payment of cash are the basis for recording transactions. Thus it is not the date on which goods and services are received that matters, as in accrual accounting, but the dates on which the cash changes hands for the transactions. Cash basis accounting is typically used for tax purposes by individuals but not by corporations. Compare
accrual accounting.
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