Cash Basis (Noun)
Meaning
A method of accounting in which each item is entered as payments are received or made.
Classification
Nouns denoting possession and transfer of possession.
Examples
- The company uses the cash basis method of accounting, which means they only record income when they receive the payment from clients.
- The accountant recommended switching to the cash basis method to simplify the company's financial records.
- Under the cash basis method, the company's expenses are recorded when they are paid, not when they are incurred.
- The cash basis method is often used by small businesses because it is easier to track and manage cash flow.
- The company's financial statements are prepared on a cash basis, which means they reflect the actual cash received and paid during the period.