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Switching from Cash to Accrual

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  • Switching from Cash to Accrual

    My company has used cash since it's inception. When the auditors come in they make necessary adjustments to certain things that overlap fiscal years when preparing our tax forms.
    My new boss now wants us to do everything on an accrual basis, and it's seems to be getting a little convoluted. For example, we received payment today for a charge that was incurred from April-June 23, 2018. Our fiscal year ends June 30th. She wants me to date the entry in QB June 23. However, in my mind this will make out bank reconciliation for June out of whack with QB, and our bank rec for Jan. out of whack with QB, since the check will show on bank statement as deposited today.
    I know there is some QB function to create these receivables, but we don't use that (yet).

    Thanks.

  • #2
    the accounting is entered the same way, QB only does accrual accounting. Cash or accrual basis is the reporting method.

    cash basis = reports only paid expenses and income

    accrual basis = reports all unpaid and paid expenses and income as of the date they are entered

    Create an invoice dated 2 June, income posts on that day. and financial statements reflect that. (P&L for income, balance sheet for A/R)

    get paid on 3 Aug, and nothing happens to the P&L, all that changes is A/R and the bank you deposit it to on the balance sheet.

    You are right, you do not back date the date of payment receipt.

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    • #3
      Thanks for your reply. So from what I gather we need to start creating invoices in QB when we send them out, which we don't do now? Until now we just mail out invoices and record the payment when we receive the check.

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      • #4
        Originally posted by saxahoya View Post
        Thanks for your reply. So from what I gather we need to start creating invoices in QB when we send them out, which we don't do now? Until now we just mail out invoices and record the payment when we receive the check.
        Yes if you want income to be booked when you invoice

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