Choose between cash and accrual accounting methods in QuickBooks Online

Learn more about the difference between Cash and Accrual methods for QuickBooks Online 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.

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.

Cash

When using the Cash accounting method, you record income and expenses at the time you actually receive a payment or pay a bill. 

The cash method in reports:

• This report counts income or expenses only once you get a payment or pay a bill.
• If you sent an invoice or got a bill but the money hasn’t changed hands yet, your report doesn’t include it in your income or expenses.

Accrual

When using the Accrual accounting method, you record income and expenses when you send the invoice or receive the bill.

The accrual method in reports:

• This report counts income and expenses regardless of if the invoice or bill was paid or not.
• It includes income and expenses even if the money hasn’t changed hands yet.

How Cash and Accrual accounting affect VAT

When you use the cash basis method, you report your income when you receive it.

When you use the accrual basis method, you report your income when you bill it.

Change the accounting method for your company

1. Go to Settings and select Account and settings.
2. Select Advanced.
3. In the Accounting section, select the pencil ✎ icon.
4. Select an Accounting method.
5. Select Save, then Done.

Change the method on a report

To see the difference another accounting method will make in your reporting, you can customise an individual report to use a different accounting method and compare the results.

Note: Some of the reports may be viewed in classic view only, modern view only, or both classic and modern views that you can switch.

To change the method used on an individual report:

1. Go to Reports (Take me there).
2. Select a report.
3. If the report opens in:
   • Classic view: Under Accounting method, select Cash or Accrual.
     Note: You can also select Customise to open the Customise report window and change the setting in the General section.
   • Modern view: In the Accounting method ▼ dropdown, select Accrual or Cash.
4. Select Run report.