Kassaperusteisets

Kassaperusteisets is a Finnish term that translates to "cash-based" in English. It refers to a method of accounting or financial management where income and expenses are recorded only when cash is actually received or disbursed, rather than when they are earned or incurred. This differs from accrual accounting, which recognizes revenue when earned and expenses when incurred, regardless of when the cash changes hands.

In a cash-based system, a business would record revenue when a customer pays for a product or service, and record an expense when it pays a bill. This method is generally simpler to manage than accrual accounting, making it popular among small businesses, individuals, and non-profit organizations with straightforward financial transactions. The primary advantage is its direct link to the cash flow of the entity, providing a clear picture of immediate liquidity.

However, cash-based accounting can provide a less accurate representation of a company's overall financial health and performance over a specific period. For instance, it may not reflect outstanding invoices owed to the business or expenses that have been incurred but not yet paid. This can lead to potential misinterpretations of profitability and financial obligations. Many jurisdictions require or recommend accrual accounting for larger businesses due to its more comprehensive financial reporting capabilities.