Accounting

    Cash-basis accounting

    Recording income when cash is received and expenses when cash is paid.

    Definition

    Simpler than accrual. Required for most small trades. Tax owed only on collected cash, not invoiced amounts. Best for businesses with <$25M revenue.

    Related terms

    Accrual-basis accounting

    Recording income when earned and expenses when incurred, regardless of cash timing.

    Cash flow

    The net movement of cash into and out of a business over a period.