Forum

Accrual vs. Cash Re...
 
Notifications
Clear all

Accrual vs. Cash Reporting


(@terri-20)
Joined: 2 years ago
Posts: 5
Topic starter  

Can anyone explain why in QBO when running a P&L report, the amounts are different for cash and accrual? 


Quote
(@casey-4)
Joined: 2 years ago
Posts: 163
 

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.


ReplyQuote
(@terri-20)
Joined: 2 years ago
Posts: 5
Topic starter  

@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. 


ReplyQuote
(@casey-4)
Joined: 2 years ago
Posts: 163
 

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.


ReplyQuote
 Corinne Collins
(@Corinne Collins)
Joined: 5 months ago
Posts: 1
 
Posted by: @terri-20

Can anyone explain why in QBO when running a P&L report, the amounts are different for cash and accrual? 

 


ReplyQuote
(@caleb_cruze)
Joined: 5 months ago
Posts: 4
 

When you choose a Cash basis, the report shows the income or expenses based on the payment date of your invoices and bills. While the Accrual basis shows the income and expenses based on when you sent your invoices or got your bills.

Also, there are several reasons why the cash vs accrual summary has a difference:

  • Invoices are paid and deposited to Undeposited Funds
  • Some payments were not applied to invoices properly
  • Manual deposits
  • Missing purchase transaction
  • The number of paid invoice vs opened invoice varies
  • This way, you can check and run reports to see the difference.

Regards,
Caleb


ReplyQuote

Leave a reply

Author Name

Author Email

Title *

 
Preview 0 Revisions Saved
MENU