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What is meant by Cash-Basis Accounting ?

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تم إضافة السؤال من قبل manseer muhammed ali , Accountant General , Royal Lighting L.L.C & Royal Furnishing LLC
تاريخ النشر: 2016/02/17
Frank Mwansa
من قبل Frank Mwansa , ACCOUNTING LECTURER , FREELANCER

 Cash basis accounting  is a method were income is recorded when cash is received by the entity and the expense are recorded when cash is paid.

Unfortunate, cash basis accounting does not conform with the provisions of GAAP and is not regarded a good management tool because it leaves a time gap between recording the cause of an action e.g sales and its e.g receipt.

The method is ,however, simpler than the accrual basis accounting and very suitable for small organisations that carry out their business in cash.

REDA ABDELAZIZ
من قبل REDA ABDELAZIZ , مدير مالي , Arabian Supplies WLL

An accounting method wherein revenues are recognized when the cash is received and the expenses are recognized when it paid.

most of the companies are following accrual basis of accounting.

Cash basis accounting method not acceptable under IFRS and GAAP  

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