Accounting
Cash Basis Accounting
An accounting method that records revenue when cash arrives and expenses when cash leaves.
Cash basis is the simplest accounting method. It matches what's actually in the bank account closely — but distorts month-to-month profitability when receivables, payables, or inventory are meaningful.
Most small businesses start on cash basis for simplicity. Switching to accrual happens via Form 3115 with a §481(a) adjustment.
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