qbteachmt
Level 15

Other questions

You are not really following the data flow correctly, here. Let's take it in pieces. And it matters if you are a Cash Basis Entity or Accrual. Do you do $5m in business?

 

"However, it is not cash income until it is invoiced."

 

That is Not True for an Accrual Basis Entity, which links retention to Other Current Asset. Let's do one example:

Invoice for $5,000 <== income

Retention is $1,000 <== other current asset, to be charged later

= $4,000 due now

The invoice is AR, which is a type of Asset. So, now you have:

$4,000 owed in AR

$1,000 owed later, sitting in Other Current Asset

= $5,000

 

That is Money being split. $4,000 now and $1,000 later. The Income is Always there, as $5,000, for an Accrual Basis entity, even if that invoice is never paid.

 

"It is still shows up as cash income on the P & L; it again shows up when it is invoiced and paid."

 

Not as Income. When an accrual basis entity Invoices for Retention, later, they are charging that Other Current Asset. That Clears the Other Current Asset and results in Funds to Banking. See how this never hits the P&L later?

 

"Taxes reported on Cash basis."

 

Then you have your Retention Item set up Incorrectly. What you want is:

$5,000 sales income now

Retention $1,000 <== linked to one income account used only for retention and write offs and refunds

= $4,000 now

And later, you invoice for Retention, and that will be income Then.

 

"Receipt of payment may not be for over a year. Then it is reported again when received."

 

You have your Item Setup Incorrectly. Edit the item and change the account link. QB offers to move the existing data for you.