Cash basis accounting is an accounting method that recognizes revenue and expenses only when cash is actually received or paid out. Under the cash basis method, companies record income only when payments from customers are received and record expenses only when bills are paid. This contrast with the accrual basis accounting method, wherein revenues and expenses are recognized when they become due and payable, regardless of whether cash has been exchanged. The cash basis method is simpler to use than the accrual basis method; it’s also a viable option for smaller organizations who don’t deal with large transaction volumes.