Dictionary / Basis
What does Basis mean in accounting?
Quick definition
GeneralCost, or a value employed as a substitute for cost. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
Read more below
Examples
A deck oven starts at what you paid
On February 6 your bakery buys a deck oven from a restaurant-equipment supplier for $11,200 plus $380 delivery. Basis is $11,580: the cost to put the oven in service. Add a fixed asset in QuickBooks Online or Xero at $11,580 and start depreciation from that figure. The February P&L should not take an $11,580 oven expense. When you later sell or scrap the oven, gain or loss also starts from $11,580; adjusted basis is only the later running figure after wear is posted.
A contributed machine is not zero
On July 18 your HVAC shop puts a used recovery machine on the books. Your partner already owned it; there is no company bill and no check from the business account. Basis is a substitute for cost: $1,850 from a written current-value quote at a refrigeration supplier, not $0 and not the $3,200 personal receipt from years ago. Start depreciation from $1,850 on the fixed-asset schedule. If you leave the machine off the books, a later sale or scrap has no starting number for gain or loss.
Why it matters
Basis is the starting number you measure depreciation and later gain or loss from on a fixed asset. You set it when you buy the asset or first put it on the books, then you leave it alone most months. Usually it is what you paid; when the business never wrote a check, you still need a substitute value so the fixed-asset schedule has something to start from. If you expense a long-lived purchase, or skip owner-contributed equipment, later depreciation and any sale have no starting figure, and adjusted basis cannot do that job because it is the running number after improvements and wear, not the original starting point.
Further reading
Compare this term with reference material from other accounting and finance websites.
Keep learning
Start with the bookkeeping basics, then compare software when you are ready to pick a tool.
Getting startedBookkeeping basics for small-business ownersWhat bookkeeping is, the records you need, double-entry in plain English, and a monthly rhythm that fits a 1–50 person shop.Updated October 4, 2026
RolesWhat does a bookkeeper do?A bookkeeper records bills, invoices, and bank activity so your books stay current. See the weekly work, the month-end close, and what they do not do.Updated August 18, 2026
Monthly closeMonthly bookkeeping: what to close each monthMonth-end is the job: reconcile banks and cards, age bills and invoices, check payroll, then read the reports. A close checklist for small-business owners.Updated August 18, 2026
Receipt CaptureThe 7 Best Receipt Capture Tools for Small BusinessThe 7 best receipt capture tools for small business, ranked: OCR accuracy, QuickBooks and Xero sync, real pricing, and honest tradeoffs for each pick.Updated August 9, 2026Frequently asked questions
What is Basis in bookkeeping?
Cost, or a value employed as a substitute for cost.
When should I use Basis?
Use Basis when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Basis?
Basis is used for basis entries, while Bad Debt covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.