Final answer:
The system of reporting income where income is recognized at the time the money is collected is called the cash basis accounting method.
Step-by-step explanation:
The system of reporting income where income is recognized at the time the money is collected is called the cash basis accounting method. This method records income when it is actually received in cash, regardless of when it was earned or when the sale was made. It is commonly used by small businesses or individuals who do not have complex financial transactions.
For example, if a business sells a product and receives payment immediately, the revenue from that sale will be recognized as income right away using the cash basis accounting method. However, if the business sold a product and allowed the customer to pay later, the revenue would not be recognized until the payment is received.