Which accounting method should I use?
Each method has its own pros and cons. It's important to understand how each method works so you can choose the best bookkeeping practices for your business. If you're unsure which method to use, talk to your accountant. Or, find an accountant if you need one.
Learn more about the difference between the cash and accrual methods, and how to change between the two.
You can change your accounting method in QuickBooks in just a few steps. Just remember that each method reports your income and expenses differently. Once you change your accounting method, accounts and balances in your reports might show up differently.
When you use the cash method in reports:
- Your report will count income and expenses when you receive the payment or pay the bill.
- If you've sent an invoice or received a bill but the money hasn’t changed hands yet, your report doesn’t include it in your income and expenses.
When you use the accrual method in reports:
- Your report will count income and expenses as soon as you send an invoice or record a bill.
- It will include income and expenses even if the payment has not been made.
Change the accounting method for your company
- Select Settings ⚙, then select Account and settings.
- Go to the Advanced tab.
- In the Accounting section, select the Edit ✎ icon.
- Choose the Accounting method.
- Select Save, then select Done.
Change the method on a report
To see the difference another accounting method will make in your reporting, you can customize an individual report to use a different accounting method and compare the results.
To change the method used on an individual report:
- Go to Reports (Take me there).
- Select a report.
- Select Cash or Accrual under Accounting method. You can also select Customize to open the Customize report window and change the setting in the General section.
- Select Run report.
Talk to an accountant about which method is most appropriate for your company. For more information, visit find a ProAdvisor page. You can also visit the CRA website to find out more on Accounting methods and the industries to which they can be applied.