Accrual vs. Cash Reporting
Can anyone explain why in QBO when running a P&L report, the amounts are different for cash and accrual?
On a Cash Basis, income and expenses are recognized when payments are received or paid.
On an Accrual Basis, income and expenses are recognized when Invoices are sent to clients and Bills to be paid are entered to the accounting system.
If you don't understand this, maybe some more education would help....this is very basic.
@casey-4 That doesn't really answer my question on why the amounts are different. If the payment is the same, why are the reports different.
If you enter an invoice on Jan 15th for $1000, and receive the payment on Feb 5th, on an accrual basis, income is recorded in January. On a Cash basis, income is recorded in Feb.
Expenses are the same...if you enter a utility bill on Jan 15th for 1000, and pay it on Feb. 5th, on an accrual basis, the expense is recorded in January, on a cash basis the expense is recorded in Feb.
That is why the P&L will be different between cash and accrual.