About accounting basis

Accounting basis is the method that determines how and when revenue, cost, and expense are recognized to the general ledger. The types of accounting methods are cash and accrual. The cash accounting method reports revenues, costs, and expenses when the cash is received or disbursed, regardless of when revenues are earned and expenses are incurred. The accrual accounting method recognizes revenues and expenses at the time they are earned and incurred, regardless of when the cash transaction occurs.

The types of accounting methods are:

• Accrual
• Cash

The accrual accounting method recognizes revenues and expenses at the time they are earned and incurred, regardless of when the cash transaction occurs.

The cash accounting method reports revenues, costs, and expenses when the cash is received or disbursed, regardless of when revenues are earned and expenses are incurred.

For a detailed discussion, see About accrual vs. cash accounting basis.