Final answer:
The system that accounts for expenses when they are paid and revenue as it is generated is known as cash basis accounting. This is opposed to accrual basis accounting, which records expenses and revenue when they are incurred and earned respectively.
Step-by-step explanation:
In the context of proper accounting techniques, the system that recognizes expenses when they are paid for and recognizes revenue as it is generated is known as the cash basis of accounting. This method is in contrast to the accrual basis accounting, which recognizes expenses when they are incurred and revenue when it is earned, regardless of when the money is actually exchanged.
Small businesses and individuals often use the cash basis for its simplicity, but accrual basis accounting provides a more accurate financial picture for larger companies.