Are there accounts receivable in cash basis accounting?

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Harris 0 Comments

I know that accounts receivable is the pretty much the sales made that are not paid yet. What about the companies that prepare reports using cash basis accounting? Are there accounts receivable under cash basis accounting?

2 Answers

score 0 · Answer 1 · 2012-12-02T21:47:22+00:00

No, in cash accounting the transaction is recorded when the amounts have been actually paid. Since no sale is recognized until you are paid, there are no receivables for your sales.

score 0 · Answer 2 · 2013-05-07T23:26:53+00:00

No they are not any accounts receivable when you use cash basis accounting. The whole idea of the cash accounting system is that a transaction is recognized when cash is exchanged (received or paid). If you don’t receive or pay any cash, then there is no transaction. In other words, until your customer pays the invoice and clears the balance, the income will not be recognized so there is no debtor (or accounts receivable) balances in cash accounting.