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??? 

Replies (4)
option 1 is correct.

Yes, option 1 is Correct.

Only name suggest the basis of accounting,as an when u received or paid income or expense should b claim.

Option 1 is correct

For eg: Bank statement, of that period can also be called as cash basis Accounting

 

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