Kontantbasis

Kontantbasis, or cash basis accounting, is an accounting method in which revenues are recognized when cash is received and expenses are recognized when cash is paid. It contrasts with accrual basis accounting, which records revenues when earned and expenses when incurred, regardless of cash flow. Under kontantbasis, receivables and payables are not recorded as separate assets or liabilities; the books reflect actual cash inflows and outflows.

Use and eligibility

This method is commonly used by individuals, freelancers, and small businesses with simple operations. In many jurisdictions, cash basis is allowed for tax reporting or for VAT under special schemes. The approach is generally easier to maintain and provides a straightforward view of cash flow and liquidity, which can aid budgeting and financial control.

Advantages

Kontantbasis simplifies record-keeping by requiring fewer estimations and adjustments. It aligns income and expenses with actual cash movements, reducing the risk of recognizing income before it is received or costs before they are paid. It can improve visibility into short-term liquidity and is often preferred by businesses that operate with cash-based transactions.

Limitations

Because profits may not reflect earned revenue or incurred costs, kontantbasis can distort profitability and performance over time, especially for sales on credit or delayed expenses. It is often unsuitable for external financial reporting under GAAP or IFRS and may be restricted for larger businesses or those with significant inventories. Tax and regulatory rules may also limit its use or require a different method for certain activities.

See also: accrual basis, cash accounting, double-entry bookkeeping.