Cash Accounting records transactions when?

• A. Records transactions when customer pays and company receives cash
• B. Records when cash is received
• C. Records when the transaction occurs
• D. Records revenue when earned

Answer: (D)

Cash accounting recognizes transactions only when cash changes hands. Revenue is recorded when cash is received, and expenses when cash is paid. Therefore, the description that revenue is recorded when cash is received best matches cash accounting. The other ideas reflect accrual timing—recording when the transaction occurs or when revenue is earned—rather than when cash actually moves.