Differentiate Cash and Accrual basis

Learn the difference between Cash and Accrual basis and how to set them as preferences in QuickBooks Desktop for Windows.

Accrual basis

• In this accounting method, the time when you enter a transaction and the time when you actually pay or receive cash may be two separate events.
• An accrual basis report shows income regardless of whether your customers have paid your invoices and expenses regardless of whether you have paid all your bills.

Cash basis

• A bookkeeping method in which you regard income or expenses as occurring at the time you actually receive a payment or pay a bill.
• A cash basis report only shows income if you have received cash and expenses if you have paid cash.

Report preferences

• Summary reports can be on a cash or accrual basis. They summarize groups of transactions and usually have the word Summary in their titles.
• Detail reports list individual transactions. They always default to accrual basis when you create them from the Reports menu.

To set your preferences:

1. Log in to your file as the Administrator. Make sure you are in Single-User Mode.
2. Go to the Edit menu, then select Preferences.
3. Select Reports & Graphs, then go to the Company Preferences tab.
4. In the Summary Report Basis section, select Accrual or Cash.
5. Select OK.