What is Cash Accounting?

Cash accounting in the context of construction refers to a method of accounting where revenue and expenses are recorded only when cash is actually received or paid out. This means that income is only recognized when payment is received from clients, and expenses are only recorded when payments are made to suppliers, subcontractors, and other vendors. This method provides a straightforward and easy-to-follow way of tracking finances, as transactions are only recorded when money physically changes hands.For construction companies, cash accounting can be particularly useful due to the nature of the industry. Projects often involve large sums of money being paid out for materials, labor, and other expenses before any revenue is generated. By using cash accounting, construction companies can accurately track their cash flow and ensure that they have enough funds on