What Is Cash Method Accounting?
Cash method accounting refers to recording an item of income or expense when it is paid. Cash method does not literally mean only receipt or use of actual dollars. It covers any kind of payment including checks, barter, and credit cards. Most businesses selling services use cash method accounting for income and expenses. Under cash method accounting one simply reports income in the year received and expense income in the year paid. Most small businesses and individuals use this method of accounting.