cash cost

Definition

A process of cash basis accounting that categorizes costs as they paid in cash and considered on the general ledger at the point of sale. This occurs when a business pays for sing cash or checks but not when using credit. Credit costs paid would not be posted to the general ledger until the actual cash payment has been received. The method is opposite of the accrual cost recognition method which has a direct impact on the operating cash flow figure. Companies now tend to shy away from using cash cost methods since the accrual method will include credit as well as cash transactions at the same time.
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cash conversion cycle cash cow