Every small business owner should have at least some understanding of daily record-keeping practices and principles. Even if you hire an accountant to manage your books, you need to have a basic knowledge of how things work to ensure they’re being processed correctly. Here are some of the basic accounting and bookkeeping principles defined in simple terms.
With the cash basis of accounting, income is recorded when its received, and expenses are recorded as theyre paid. The cash method does not take into account any accounts receivable or accounts payable. It strictly applies to payments from clients or sales once you receive the cash in-hand and when an expense clears your bank account.