a method of bookkeeping in which income is considered earned when received and expenses are not taken into account until paid.

A system of accounting in which revenues are recorded when actually received and outlays are recorded when payment is made. Compare with accrual accounting.

Cash accounting systems recognize transactions and events when cash is received or paid.

A scheme where VAT is paid on payments and receipts rather than the invoices that you raise. This scheme is available for small companies with a turnover below a given threshold.

A method of accounting for transactions whereby the transaction is recorded when cash is received or spent.

A method of accounting under which revenues and expenses are recorded only when cash is received or when cash is paid out.

This term describes an accounting method whereby only invoices and bills which have been paid are accounted for. However, for most types of business in the UK, as far as the Inland Revenue are concerned as soon as you issue an invoice (paid or not), it is treated as revenue and must be accounted for. An exception is VAT : Customs & Excise normally require you to account for VAT on an accrual basis, however there is an option called 'Cash Accounting' whereby only paid items are included as far as VAT is concerned (eg. if most of your sales are on credit, you may benefit from this scheme - contact your local Customs & Excise office for the current rules and turnover limits). [Go to source

The process of recognising financial transactions only when there is a cash impact as opposed to accrual accounting (see accrual accounting above). In cash accounting an expense is recognised only when the invoice is paid.

Revenues and outlays recorded in an organisation's accounts when cash is collected or spent.

Keeping records of money received or expended.