Читать книгу Reading Financial Reports For Dummies - Lita Epstein - Страница 70

In cash-basis accounting, companies record expenses in financial accounts when the cash is actually laid out, and they book revenue when they actually hold the cash in their hot little hands — or, more likely, in a bank account. For example, if a painter completes a project on December 30, 2021, but doesn't get paid for it until the owner inspects it on January 10, 2022, the painter reports those cash earnings on their 2022 tax report. In cash-basis accounting, cash earnings include checks, credit card receipts, and any other form of revenue from customers.

Smaller companies that haven't formally incorporated and most sole proprietors use cash-basis accounting because the system is easier for them to use on their own, meaning that they don't have to hire a large accounting staff.