Cash and accrual are two methods of reporting income and expenses. The same report can paint a different picture depending on the method you pick.
When you use the cash method in reports:
- Your report counts income or expenses as though they happened when you got the payment or paid the 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
When you use the accrual method in reports:
- Your report counts income and expenses as if they happened when you sent the invoice or got the bill
- It includes income and expenses even if the money hasn’t changed hands yet
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.
To change the method used on an individual report:
- Go to Reports.
- Select a report.
- Select Cash or Accrual under Accounting method (you can also select the Customise button to open the Customise Report window and change the setting in the General section).
- Select Run report.
Talk to your accountant about which method is most appropriate for your company.