Financial Poise

Cash Basis Accounting

  • March 17, 2022
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In Cash Basis Accounting, revenues and expenditures are recognized only when money is exchanged, regardless of when goods or services are delivered. Cash basis accounting is used by individuals and some very small businesses. This method of accounting is simpler to execute on but results in information that is not as useful to evaluate a company’s financial performance. It also obviates the need for a statement of cash flows.