A method of accounting based on cash receipts and disbursements. Contrast accrual method.
A method of accounting in contrast to the accrual method. Under the cash method, income is recorded only when the cash is actually received, without regard to when it was earned. Likewise, expenses are recorded only when actually paid, without regard to when they were actually incurred.
A method of tax accounting requiring the taxpayer to report as income all cash and property actually or constructively received during the tax year and, as deductions, all cash disbursements actually made during the tax year (except for payments that will benefit the taxpayer for a period longer than 12 months, such as prepaid rent).