Cash Basis

The cash basis is a method of recording transactions for revenue and expenses. You only record the revenue when a payment is received and the expense when the payment is actually done. You don't record receivables or payables as it's part of the accrual method. 

A printing company buys paper and sells folders. 

1.  Create the accounts. 

Note: cash basis does not use the liability type ofaccounts. 

2. Record the transactions.

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