Definition of Cash Basis of Accounting

The term “basis of accounting” is used to describe the timing of recognition, that is, when the effects of transactions or events should be recognized (Government Finance Officers Association, GFOA, 2023).

The Governmental Accounting Standards Board (GASB), in statement 34, defines the cash basis of accounting as:

• Revenues are recognized only when cash is received.
• Expenses are recognized only when cash is disbursed(GASB34, 2023).

For details on how to configure a Cash Basis Accounting Method using subledger accounting rules please read the How to configure a Subledger Accounting Method for Cash Basis whitepaper on Cloud Customer Connect.