Advertise here    

QuickBooks Forums      

Go Back   QuickBooks Forums > QuickBooks Software Support > QuickBooks Pro Forum

Reply
 
Thread Tools Rate Thread Display Modes
  #1  
Old 11-30-2017, 12:29 PM
profitpro profitpro is offline
Registered User
 
Join Date: Nov 2017
Posts: 2
Customer Pre-payments and Accrual / Cash Basis Reporting

Our client files their tax return on cash basis but wants to utilize both accrual and cash basis reports in QB. Currently on some invoices they receive an upfront deposit from the customer of $20k for example. Typically, the want to be able to accrue this revenue over 4 months. Currently, I have this setup with an invoice using an "other item" that points to the Customer Deposits Current Liability on their Chart of Accounts. Then, we create an invoice each month recording $5k to Sales and offset that by the amount of the Customer Deposit.

When I do this my accrual reports show correctly, but not cash basis P&L. The client would like to be able to toggle between both options so they can see their cash basis revenue as well. Also, when we file the tax return on cash basis seems like it would be additional work to figure out the cash basis financials. We would like QuickBooks to handle these differences for us by toggling between cash and accrual basis reporting options.

Any advice would be much appreciated.

Thanks, Dave
Reply With Quote
  #2  
Old 12-01-2017, 06:38 AM
Rustler Rustler is offline
Registered User
 
Join Date: Feb 2008
Location: Texas - The Republic
Posts: 2,366
Cash basis really means no a/r and no a/p, so what you are asking is a modified cash basis. QB is accrual accounting, it only reports (poorly) on a modified cash basis, and you can toggle from accrual to cash basis on almost all reports as desired.

When you enter a sales for 5K, you apply part of the deposit to it in order to pay it off. Are you using the same other charge item, with a qty of negative one, and the 5K amount on the invoice to "pay" the invoice?
Reply With Quote
  #3  
Old 12-04-2017, 08:54 PM
profitpro profitpro is offline
Registered User
 
Join Date: Nov 2017
Posts: 2
Cash Accrual Invoice and Reporting

Yes. It gives me the same result cash or accrual.

My original Invoice: https://www.screencast.com/t/nQj2qVylvB

Client wants to see cash basis income on this in the month payment is received.

My first payment invoice: https://www.screencast.com/t/dnnHnXA8

Accrual Income shows in Oct which is correct.

But need cash basis income to reflect actual $20k received. any ideas?
Reply With Quote
  #4  
Old 12-04-2017, 11:31 PM
Lorin Browning Lorin Browning is offline
Registered User
 
Join Date: Apr 2004
Location: Landrum SC
Posts: 626
The $20K cash for accounting purposes, whether one uses QuickBooks or not and whether one runs accrual or not, is not $20K of Income. It's is only $5K income and $15K to a non-income account. You rightly coded the item as Deferred Revenue. But we couldn't see what type of an account Deferred Revenue posts to. It seems obvious, though, from your second screen shot that you are treating it as an income statement account.

The problem arises when you treat a Balance Sheet account, such as Deferred Revenue, as if it were an Income Statement account.

As a practical workaround, try adding a new income statement account called something like Unearned revenue and, by the judicious use of filters in your reports, include that account when doing a profit and loss on an accrual basis and filter it out when running a profit and loss on a cash basis. Of course, you might want to retitle each report to distinguish between the two.

For what it is worth, there are somethings that QuickBooks simply cannot do without some serious workarounds. Automatically changing an account type, such as deferred revenue, from a balance sheet account to an income statement account is one such thing.

You may want to see whether a statement of cash flow gives what the client wants, which is one of the three basic financial statements.
__________________
Lorin Browning, Ph. D.
Fellow -- National Tax Practice Institute
lorin@lorinbrowning.com

Last edited by Lorin Browning; 12-05-2017 at 10:17 AM.
Reply With Quote
  #5  
Old 12-05-2017, 05:18 AM
Rustler Rustler is offline
Registered User
 
Join Date: Feb 2008
Location: Texas - The Republic
Posts: 2,366
Quote:
Originally Posted by profitpro View Post
Yes. It gives me the same result cash or accrual.

My original Invoice: https://www.screencast.com/t/nQj2qVylvB

Client wants to see cash basis income on this in the month payment is received.

My first payment invoice: https://www.screencast.com/t/dnnHnXA8

Accrual Income shows in Oct which is correct.

But need cash basis income to reflect actual $20k received. any ideas?
Client wants to see cash basis income on this in the month payment is received.

You can not have it both ways. Either the 20K is income, or it is not income and is deferred income.

The second invoice is income, cash and accrual, when saved, the income is received by the application of the deferred income.
Reply With Quote
  #6  
Old 12-05-2017, 12:29 PM
Froid Froid is offline
Registered User
 
Join Date: Feb 2017
Location: Southern California
Posts: 119
Can the OP consider creating some sort of job cost and percentage of completion system? I do not know how to perform this in QB, but at previous places worked I recorded with a combination of J/E's and system transactions.

That particular company engaged in chargeable engineering work, with progress billings and revenue recognition based on percentage-of-completion. On our balance sheet, advance payments posted to deferred revenue, while accumulated costs went to an inventory account. It seems the OP could use something like this method to properly match costs off against P&L revenue.

It doesn't qualify as anything resembling cash basis accounting, but nothing in this scenario does, anyway. My oversimplification will give all you good accountants something to figure out.
Reply With Quote
Reply

Bookmarks
Bookmark and Share
Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is On

Forum Jump


All times are GMT -5. The time now is 02:17 AM.


 

Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
All contents copyright (c) by AccountingUsers Inc.