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Cash Basis accounting recognizes revenue and expense when cash is actually spent or received. For example, revenue from sale of goods is recognized when payment is received from the customer, not when an invoice is created.

The Accrual accounting method recognizes revenue when it is earned and expenses when they are incurred. In the above example, revenue from sale of goods is recognized when the invoice is created.

If you choose cash basis as your accounting method, but actually sell goods to customers on credit, Receivables provides a system to keep track of your receivables without affecting your financial accounts.

See Also

Journal Entries

Preparing Receivables

Defining Receivables System Options

Accounting for Transactions (Accrual method)