How to Calculate Net Income Under Cash Basis refers to a method of accounting that recognizes income and expenses only when cash is received or paid. For example, a sale is recorded as income when payment is received, rather than when the goods or services are provided.
The cash basis method is commonly used by small businesses and individuals because it is simple to implement and can provide a more accurate picture of cash flow. Additionally, the cash basis method has been around for centuries, dating back to the early days of accounting.