Cash Basis Accounting

Definition

Records costs and revenue only when cash actually moves. Simple, but distorts timing: months with delayed invoices look artificially profitable.

Worked Example

June spending under cash basis vs. accrual:

Cash view:    June cost = $499 (one card payment)
Accrual view: June cost = $20,699 ($12,000 invoiced net-30 + $8,200 accrued)

The bank account alone understates June's true cost by $20,200.

Interpretation & Pitfalls

Acceptable for personal budgeting and very small businesses; misleading for anything with payment terms, subscriptions, or assets.

In TupicFinance

The platform records both views: accrual expense via cost items and the cash view via bank transactions — so the divergence is always visible.