Cash Based Accounting
Cash based accounting is an accounting method where revenue and expenses are recorded only when cash is actually received or paid, respectively. It focuses on cash flow timing rather than when transactions are incurred, making it simpler than accrual accounting. This method is commonly used by small businesses, freelancers, and individuals for straightforward financial tracking.
Developers should learn cash based accounting when building financial software for small businesses, freelancers, or personal finance apps, as it's a common requirement in these domains. It's particularly useful for projects involving invoicing, expense tracking, or tax preparation tools where simplicity and immediate cash flow visibility are priorities. Understanding this helps in designing systems that align with user accounting practices and regulatory needs.