cash accounting basis

Meaning

1. 1nounsingularbusinessfinance

   A method of accounting where income and expenses are recorded when money actually changes hands, not when they are earned or incurred.

   Grammar: Usually singular; often preceded by 'on a' or 'the'.

   Patterns

   • on a cash accounting basis
   • use the cash accounting basis
   • under the cash accounting basis

   Small businesses often choose the cash accounting basis because it is simpler.

   Under the cash accounting basis, you record a sale only when you receive payment.

   The company switched to a cash accounting basis to better match its cash flow.

Common combinations

on a cash accounting basis

The firm reports its earnings on a cash accounting basis.

cash accounting basis of accounting

The cash accounting basis of accounting is common for sole proprietors.

adopt the cash accounting basis

They decided to adopt the cash accounting basis for tax purposes.

cash accounting basis taxpayer

A cash accounting basis taxpayer recognizes income when received.

Synonyms and how they differ

cash basis

A shorter, more common way to say the same thing; often used in informal business talk.

cash-basis accounting

Same meaning, used as a compound adjective before 'method' or 'system'.

Opposites

Word family

cash basis noun

The short form of cash accounting basis.

accrual basis noun

The contrasting method where income is recorded when earned, not when paid.

Commonly confused: cash accounting basis or accrual basis?

Practice

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Write a sentence using “cash accounting basis”, then check it and compare it with the examples above.

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