Accounting
Cash basis accounting
An accounting method that records income when money is received and expenses when they are paid.
Under cash accounting, unpaid rent does not appear as income and an unpaid bill does not appear as an expense. The books reflect only money that actually moved through the bank.
Many individual owners prefer cash-basis statements because they match their bank balance and tax filing. The drawback is that timing distorts results: a bill paid a few days late shifts expense between months.
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