Question

What is cash basis?

Answer 1

Cash basis of accounting states that revenues and expenses should be recognised at the time when the payment is received or made.

In other words, revenue and expenses are recognised when cash is exchanged between the parties involved in the business.

Also read:

• Difference Between Cash Basis and Accrual Basis of Accounting
• Accrual Basis of Accounting
• GAAP Generally Accepted Accounting Principles
• Difference Between GAAP and IFRS

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