Correct interpretation of cash basis of accounting

I am confused about the correct interpretation of "CASH BASIS of ACCOUNTING". Which one of the following 2 interpratations is correct.

1. Revenue/Costs should be recognised in the period in which cash is received/paid irrespective of perioed of accrual of such revenue/cost.
2. Revenue/Costs should be receognised in the period in which receipt as well as accrual of reveue/costs is complete.

Kindly provide your opinion???