Cash Accounting

I. Formal Definition

A method of accounting in which revenue and expense are recognised at the moment cash is received or paid, regardless of when the underlying economic activity occurred. Cash accounting is permitted for very small entities under most major standards but is generally not federation-grade for accreditation evidence. The federation accepts cash accounting only for entities below a defined materiality threshold and requires cash-basis members to maintain a documented transition plan to accrual accounting under UFMS-001:5.1. Hybrid approaches must clearly distinguish the two views.

II. Etymology

A standard term of accounting practice; the cash basis is the older method, predating widespread accrual adoption in the late nineteenth century.

III. Federation Usage

Federation members on cash accounting are below a defined materiality threshold and maintain a transition plan to accrual. Hybrid approaches distinguish cash and accrual views in disclosure under MEV-Annex:6.1. The threshold is reviewed at the annual federation council meeting.

IV. Related Terms

• accrual-accounting
• gaap
• ifrs
• double-entry

V. Authoritative Citations

• UFMS-001:5.1UFMS Article V - Cash Basis
• MEV-Annex:6.1MEV Annex VI - Cash Reporting

VI. Citation in BibTeX

@misc{ifo4_glossary_cash_accounting,
  title        = {{Cash Accounting}},
  author       = {{IFO4 Federation Editorial Board}},
  howpublished = {{IFO4 Federation Glossary, slug \texttt{cash-accounting}}},
  year         = {2026},
  url          = {https://ifo4.org/glossary/cash-accounting},
  note         = {Category: Accounting; key: CashAccounting}
}

VII. Challenge This Definition

Federation members and accredited practitioners may challenge any entry under TGS-002:1.7. Filed challenges are routed to the editorial board, triaged into the revision register, and resolved in writing on the public docket. The slug remains stable through any revision.