Which accounting method recognizes revenue when it is received?

The cash basis of accounting is the method that recognizes revenue when it is actually received, rather than when it is earned. This means that transactions are recorded only when cash changes hands. For example, if a service is provided in one month and payment is received in the next month, the revenue would be recognized only in the month when the cash is received. This approach is straightforward and aligns with the cash flow of the business, making it particularly useful for small businesses and individuals who may not need complex financial reporting.

In contrast, the accrual basis of accounting recognizes revenue when it is earned, regardless of when payment is received. The modified accrual basis combines elements of the accrual and cash methods but primarily applies to government accounting. Standard accounting practices do not specifically pertain to one singular method but refer to a wide range of accepted financial accounting methodologies.

Thus, identifying the cash basis of accounting accurately reflects the method where revenue is recognized at the time of cash receipt, which is why it is the correct response.