Cash basis revenue recognition is a method of accounting that recognizes revenues only when cash is received from a customer. It is the simplest form of recognizing income, as it relies on basic inflow and outflow transactions. With this method, companies do not record money owed by customers until cash has actually been received. This means that accounts receivable will not be recorded in the company’s books until actual payment has come in. This accounting practice allows companies to see the true financial picture of their business and makes budgeting more accurate and efficient.