kassapõhine

Kassapõhine refers to a financial accounting method where revenue and expenses are recognized when cash is actually received or paid, rather than when the transaction occurs. This method is often contrasted with accrual accounting, which records revenue when earned and expenses when incurred, regardless of cash flow.

In a kassapõhine system, a business records income only when money enters its bank account. Similarly, expenses are recorded only when money leaves the business's bank account. This approach provides a clear picture of the business's cash on hand at any given time. It is simpler to implement and understand than accrual accounting, making it popular among small businesses, sole proprietorships, and individuals managing personal finances.

However, the kassapõhine method can distort a business's true financial performance. For instance, a company might have made significant sales on credit that have not yet been paid, leading to a low revenue figure on its kassapõhine statement, even though it has earned that revenue. Conversely, a large expense paid in advance might not appear in the current period, artificially inflating profits. Regulatory bodies and larger corporations typically require accrual accounting for its more accurate representation of financial health and adherence to accounting principles. The choice between kassapõhine and accrual accounting often depends on the size and complexity of the entity, as well as legal and tax requirements.