Difference between revisions of "Cash accounting"
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| − | '''Cash accounting''' is a method of [[accounting]] which is used in many small businesses. Companies that are publicly | + | '''Cash accounting''' is a method of [[accounting]] which is used in many small businesses. Companies that are publicly traded or subject to government regulation, however, cannot use cash accounting; they are required to use [[Accrual Accounting|accrual accounting]]. |
Under cash accounting, [[revenue]]s are recorded on the accounting records when payment is received under cash accounting. Similarly, [[expense]]s are recorded when payment is made. Assets and liabilities are generally not recorded; everything is treated as a revenue or expense item. | Under cash accounting, [[revenue]]s are recorded on the accounting records when payment is received under cash accounting. Similarly, [[expense]]s are recorded when payment is made. Assets and liabilities are generally not recorded; everything is treated as a revenue or expense item. | ||
[[Category:Accounting]] | [[Category:Accounting]] | ||
Latest revision as of 11:05, October 17, 2026
Cash accounting is a method of accounting which is used in many small businesses. Companies that are publicly traded or subject to government regulation, however, cannot use cash accounting; they are required to use accrual accounting.
Under cash accounting, revenues are recorded on the accounting records when payment is received under cash accounting. Similarly, expenses are recorded when payment is made. Assets and liabilities are generally not recorded; everything is treated as a revenue or expense item.