Cash Basis Accounting

In cash basis accounting, revenues are reported on the profit and loss statement when cash is received by a business. Similarly, expenses are reported when cash is paid and not when they are incurred.

For example, a business provides plumbing services in the month of March and it gets paid in the month of April. The revenue earned is reported in the income statement in April and not in March, when the services were actually provided.

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Related Terms

• Common Stock
• Compensatory Balance
• Cost of Capital
• Cost Basis
• Credit
• Cost of Goods Sold
• Closing Balance
• Contract
• Capital or Equity
• Chart of Accounts (COA)
• Credit Note
• Cash Flow
• Contra Entries
• Consignment
• Current Ratio
• Current Asset