What is cash accounting?
Cash accounting records transactions only when cash is received or paid.
Why do businesses use cash accounting?
It is simple and reflects actual cash position, which helps with short term cash management.
What are limitations of cash accounting?
It does not show future obligations or incoming payments, which limits long term insight.
Who uses cash accounting?
Small businesses and sole traders often use it due to simplicity.
How does it differ from accrual accounting?
Cash accounting records cash movement only, while accrual records transactions when they occur.