Cash Basis

The cash basis records revenue when a payment is received and expenses when a payment is made. Unlike the accrual basis, you do not track receivables or payables — every transaction reflects actual cash movement.

Example — a printing company

A printing company buys paper and sells folders, recording each event only when money changes hands.

The accounts

Because this cash-basis example does not track outstanding receivables or payables, the book only requires accounts for the cash position, income, and expenses.

Note

In this simplified cash-basis example, there are no supplier or payable timing accounts — expenses are recorded directly when paid. Other liability accounts, such as loans, credit cards, or taxes payable, can still exist in a cash-basis book when they reflect real obligations.

Recording the transactions

Each transaction corresponds to an actual cash movement:

Date	Amount	From Account		To Account	Description
22/07	300.00	Bank Account	>>	Papers	Expenses with papers
26/07	30.00	Client	>>	Bank Account	Client’s payment

The purchase is recorded on the date the bank pays, and the sale is recorded on the date the client’s payment arrives — not when the order is placed or the invoice issued.