# Cash basis vs. accrual

Books that count money when it moves, or when it is earned and owed.

Almost every small business a [searcher](https://searchspheresource.com/glossary/searcher) looks at keeps cash books, because that is what the tax return wants, and cash books hide two things a buyer pays for. Work finished in December and invoiced in January lands in the wrong year, so a strong final quarter can look like a weak one or the reverse. And money already collected for work not yet delivered reads as profit when it is a debt the buyer inherits. The [quality of earnings](https://searchspheresource.com/glossary/qoe) engagement converts the books before anyone argues about a multiple, and the conversion is where the price usually moves.

In numbers: A $40,000 December job invoiced in January counts in next year on cash books and in this year on accrual.

Source: https://searchspheresource.com/glossary/cash-basis-vs-accrual
Not dated: A definition is editorial: what a term means, why it matters, and an example. None of it reads a source that can go stale, so there is no date to take and a stamped one would be the build time wearing a costume.

Site index for machines: https://searchspheresource.com/llms.txt