QuickBooks enables users to create books and reports in either accrual or cash basis. Reporting is important and helps organizations in creating a better environment for all involved parties. Some companies prefer entering and recording data on an accrual basis while others prefer cash basis. QuickBooks enables you to easily change the way in which transactions are recorded and reports are created.
Transactions like income and expenses are reported as soon as invoice or bill is received. Accrued income and expenses are recorded as accounts receivable and account payable. To know more click here:
- Preferred By large organizations
- Requires professional expertise and deep knowledge of basics of accounting
Transactions are only recorded when said amount is received or paid against them. Only cash transactions are recorded into the books. For more on Cash basis, check out this article:
- Preferred by small businesses
- Requires a basic understanding of bookkeeping
It is better to try and change the basis of accounting in reports before changing it for your entire company file. Both methods of recording income and expenses can work for your company. Most organizations prefer recording income and expenses on an accrual basis as they are able to get a better picture of their financial strength at the end of the year.
Follow the steps given below to change the basis of recording income and expenses in a particular report:
- Go to Reports
- Select the report you want to create
- Select customize
- In the general section click on accounting method
- Select Cash Basis
- Hit Run Report
Steps on how to change to cash basis in QuickBooks:
- Select the Gear icon next to the Create button
- Select Company Settings
- Select Company
- Click on Accounting method and select the cash basis.
- Hit save and done.
The accounting method for your company file will be changed. You can easily change the settings by following the aforementioned steps and selecting accrual basis. Also, cash basis works wonders for small businesses like sole proprietorship but can be a bane for medium and large enterprises.
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