Cash or accrual basis, yes!

 

Cheqbook supports both the cash and accrual basis of reporting.

You can edit the company settings and toggle between the two methods.

  • Reports will print with the method chosen for the company.
  • Journal entries and downloaded transactions are only stored with one method. You have to make sure those entries match the underlying method of the company.
  • Customer Invoices and Vendor Bills will post either way.  You put the data in and Cheqbook will record the transaction either on the accrual date or the paid date.
  • You can switch back and forth at any time!

This is actually a very challenging task to do in software.  One of these days I'll write a post on how many months of work this was and the complexities of getting it right (but not today).  

For those of you who are trying to understand what the difference is, here's a quick example.

Suppose you have an electric bill for October, you received it in November, and you paid it in January.

Under the cash method of accounting it isn't an expense until you pay it, in the next calendar year.  However under the accrual method of accounting you record the expense in October, when you incurred it.  This matches the expense to the period it served.  

Accrual requires twice as many entries, there's an entry in October to book the expense and a payable to the electric company.  Then in January there's a second entry to reduce the bank balance and remove the payable. 

Cash is just recorded once, in the check register when you pay it.

Accrual is considerably more accurate.  Cash basis can totally LIE to you about the financial condition of a company, since if you're not paying bills you haven't recorded the expenses to show a loss.  

 

 

 

 

 

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