Cash basis accounting measures income based on when cash is actually exchanged. It’s an easy-to-understand system of accounting where income is recorded when money is received, rather than when a sale occurs. This helps businesses accurately keep track of expenses and income to maintain profitability. For example, if a customer purchases a product on credit, the income isn’t recorded until the customer pays in full. Cash basis accounting also makes it easier to pay taxes; instead of having to estimate profits and losses, businesses can base their taxes on actual amounts received.