7 May 2018

Cash Accounting

Finance feed by:

Mr Ananth Narayana

CA in Practice    •    15 Year 2 Month  experience

Cash accounting is the methodology under which transactions are recorded when they actually happen. For example, income will be recorded when the company receives cash and expenses are recorded when they are actually paid out and not when the bill is raised.
There are two basic type of accounting methodologies – one is cash accounting and the other is accrual accounting. Both systems have their own benefits. Cash accounting is beneficial for small companies or organisations and for complex organisational structures accrual accounting is better.
Cash accounting is a system where revenues as well as expenses are realised when they are received or paid out in case of an expense. It is fairly easy to use methodology.

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