Mergers & Acquisitions

Resources: Glossary

Don’t be confused or intimidated by any terms or abbreviations in the M&A world. You’ll find answers here.

Cash-Based Method of Accounting/ Cash Basis

Definition

One of two primary accounting methods, this method reports income when it’s received and expenses when they are paid out.

See Also

Accounting method, accrual basis.

Tips

The other of the two accounting methods is accrual-based accounting, which recognizes income and expenses based on when they are “accrued,” or when they actually occur. Most small businesses use the cash basis, while many medium-sized businesses use the accrual basis method of accounting.