What is the difference between cash and accrual accounting?
Learn how the ATO explains cash and accrual accounting methods for business income and GST.
Summary
Cash and accrual accounting are different ways of timing when income and expenses are recognized. The ATO provides guidance on accounting methods for business income and GST reporting.
What this means
Under cash accounting, amounts are generally recognized when money is received or paid. Under accrual accounting, amounts are generally recognized when they are earned or incurred, even if payment happens later.
The method used can affect tax records, GST reporting and business reporting processes.
Typical actions
- Understand which method your business uses.
- Apply the method consistently.
- Check ATO guidance for GST accounting methods if registered for GST.
- Speak with an accountant if changing methods.
Official ATO sources
Last checked: 20 June 2026
Accounting methods for business income
Explains accounting methods for business income.
Simpler BAS GST bookkeeping guide
Provides ATO guidance on GST bookkeeping for Simpler BAS.
Record keeping for business
Explains business record-keeping requirements.
Related questions
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