Definition: An accounting method that generally recognizes income when received and expenses when paid.
Example
A brokerage generally records a collected fee when payment is received rather than when an unpaid invoice is issued.
Keep the distinction clear
Cash timing differs from earning income or incurring an obligation. Tax rules such as constructive receipt and capitalization can affect the simple cash-in, cash-out picture.
Related terms
Keep studying
References: IRS Publication 538: accounting methods
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