Cash Method

Cash Method

The Cash Method is an accounting method where revenues and expenses are recorded when cash is actually received or paid, rather than when they are incurred. This method is commonly used by small businesses and individuals because it is straightforward and provides a clear picture of cash flow.

For example, if a service is performed in December but payment is received in January, under the Cash Method, the revenue is recorded in January when the cash is received, not in December when the service was rendered. Similarly, expenses are recorded when they are paid, not when they are billed.