Question

Reporting revenues only when cash is received and expenses only when cash is paid is called the.

Answer 1

The term "Cash Basis of Accounting" refers to the practise of only recording revenues when cash is received and costs when cash is paid.

• The "cash basis" method of accounting, which is often used, defines revenues and expenses as they are incurred. Contrarily, accrual accounting records expenses as they occur, regardless of when money is received or paid, and recognises income as a liability is created.

When is it appropriate to use cash basis accounting?

• Cash-basis accounting is an easy accounting method designed for small business owners. If your firm is small, you may choose to keep your books utilising the cash-basis method. You must record every transaction using the cash-basis method as soon as money is exchanged.

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