Which accounting method records income when money is received?

The cash basis accounting method is the one that records income when money is received, making it a straightforward approach for tracking income and expenses. Under this method, revenues are recognized only when cash is actually received, and expenses are recorded only when cash is paid out. This means that the financial statements reflect actual cash flow, providing a clear picture of the cash on hand at any given time.

In contrast, the accrual basis accounting method recognizes income when earned, regardless of whether the cash has been received. This could lead to situations where a company reports income that it has not yet collected, which may not accurately represent its cash position. The modified cash basis combines elements of both cash and accrual basis but does not solely match the definition of recognizing income upon receipt.

The deferral basis is not a recognized accounting method for income recognition; rather, it refers to postponing the recognition of revenue or expenses to a future period, which does not align with the concept of recording income immediately upon receipt. Thus, the cash basis is the correct answer for recording income when money is received.