Cash Basis Accounting

Cash Basis Accounting

In cash basis accounting, revenues are reported on the profit and loss statement when cash is received by a business. Similarly, expenses are reported when cash is paid and not when they are incurred.

For example, a business provides plumbing services in the month of March and it gets paid in the month of April. The revenue earned is reported in the income statement in April and not in March, when the services were actually provided.

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