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Cash Basis

   Also found in: Dictionary/thesaurus, Legal 0.01 sec.
Cash basis
Refers to the accounting method that recognizes revenues and expenses when cash is actually received or paid out.

Cash Basis
A system of accounting that recognizes revenue in the order in which it is received, and expenses on the same basis. Cash basis accounting does not deal with accounts receivable or accounts payable and only recognizes transactions actually paid for. This accounting system is easiest and perhaps best for organizations with few or no credit sales. See also: Accrual Accounting Convention.


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One startup decision that seems to cause entrepreneurs unnecessary consternation is selecting the right accounting method -- cash basis or accrual basis The primary purpose of the accounting method you choose is to calculate your business''s taxable income for federal (and state) income tax purposes
The basis in those receivables is usually zero, since the corporation is on a cash basis of accounting and has not recognized any income associated with the creation of those receivables.
97 ------------------------------------------------------------------------ Cash Basis ROA (Annualized) -0.
 
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