Under the cash basis of accounting, when is income recorded?

Under the cash basis of accounting, income is recorded when cash is received. This method focuses exclusively on cash transactions, meaning that revenues are recognized only at the point when the money is actually in hand, rather than when services are performed or when invoices are issued. This approach helps simplify accounting for small businesses or individuals who prefer to track income and expenses based solely on cash flow.

The other methods mentioned in the alternatives involve different recognition principles. For instance, recognizing income when services are rendered refers to the accrual basis of accounting, where revenues are recorded when earned regardless of whether cash has been received. Recording income at the end of the month is also indicative of accrual accounting practices, where transactions are tallied up for a reporting period rather than upon actual cash transactions. Sending out an invoice does not constitute income recognition in cash basis accounting, as the cash has not yet been received at that point. Therefore, the timing of income recognition under cash basis accounting is strictly aligned with the receipt of cash, which is why the correct choice is when cash is received.