Cash Basis vs Accrual Basis

This is rightly a question for your tax accountant, but I would say cash.

realize that QB is accrual accounting, it only reports on cash basis.

@Rustler @Jarm 

No accounting SW IS cash or accrual-based.  Some systems do one or the other better, for QB that is Cash.

Cash or accrual- based accounting is the entries and when they are made, there is only a timing difference between cash and accrual-basis accounting, the numbers are the same in the end and the system/software has little to do with how you choose to do your accounting entries or when UNLESS it prohibits you from doing the entries you want when you want to do them.  

For example, the QBO upload of transactions from bank, that would be cash-basis accounting since you are recording transactions from the bank statement when they have already been paid in cash. Same for QB Payroll, also based on cash entries, recorded when payment has been made.  

@Rustler  Why do you say QB is accrual-basis?  

No, QB is accrual accounting, it only reports on cash basis, and even that is a modified cash basis since most often inventory, CC, a/p and a/r are also involved.

how you make the entries, or when, has nothing to do with the basis of accounting in QB

@Rustler 

HOW and WHEN you make accounting entries is the only difference between cash and accrual-basis accounting, regardless of system. AP and AR are just one part of accrual-basis accounting but I have never seen an accounting system that does not have AP or AR functions. I agree that QB only reports on modified-cash or modified accrual basis.

What you state on your website on accrual-basis accounting is incorrect.

@Rustler 

How can you direct people to your website, when it is totally incorrect info?

- U.S. GAAP is REQUIRED FOR ALL Public companies in the U.S. 

- Companies with Federal contracts are REQUIRED to use GAAP accrual-basis.

- Yes, there are differences between U.S. GAAP and IRS tax laws and regulations.

- IFRS are international accounting standards, the U.S. still follows U.S. GAAP only.

- There is NO NEED for two sets of books to do this accounting properly ever.

- If company does GAAP accrual-basis on their books they DO NOT adjust for taxes.

- If you do GAAP on books and do Cash for taxes, there s/b extra charge for that task.

Your website is ABSOLUTELY INCORRECT.  You can GOOGLE to see these answers.

How can you continue to convey incorrect information to everyone here and on your site? 

@Teri 

First my blog is mine and represents my opinion.

See this article, https://smallbusiness.chron.com/gaap-vs-governmental-auditing-standards-37182.html#:~:text=However%2....

Notice the paragraph titled, GAAP vs GAS

@Rustler 

Yes, please see this on your attachment: 

"However, GAAP does not apply to government entities."

Govt entities are actual Govt offices, like the Social Security office or Post Office with Govt employees.

I doubt any of those people are using QuickBooks or logging in here for answers for how to use QB.

What we do have here, are thousands of small businesses, who decide to bid on Govt contracts.

Meaning their customer is the Govt, could be Army, Navy, etc. that they provide goods or services to.

These companies are required to follow GAAP accrual-basis accounting as a prerequisite to being awarded a Govt contract, no matter how small they are, even as small as one owner/employee and

has been that way for the 40 years that I know for sure.  This is what I am always talking about.

ALL of my clients are Govt contractors.  I have done this work for 40 years so trust me on this part.

That is why I have always said I am not here to compete with you or steal your clients, you cannot 

likely help these companies since there are many other regulations they must follow.

I get many clients from this site who have been told they don't need to do GAAP because they were

told on this website they don't have to, that is why I come here to try to save them from audit issues.

I get plenty of clients either way, just hate to see small business owners misled, since this can cause 

them to not pass audit and not be awarded contract or have it taken away, which when they are new

and small can cause them to go out of business.

@Teri 

Interesting discussion, that most of your clients need to use GAAP or do government contracting is one issue, and that issue belongs to them.

But for most people running a small business, which is what QB is designed for, GAAP is not needed or necessary, tax basis accounting is the key since it is the IRS that can ruin your life.

JMO YMMV

@Rustler 

There is no such thing as "tax-basis" accounting. There is "cash-basis" and "accrual-basis" accounting.

Accounting may be done on "cash or accrual" basis and taxes may be done on cash or accrual basis.

Each company makes those two decisions separately based on the requirements applicable to them

and their personal preference. There are IRS limitations on when or how often this can be changed.

The limitations apply only to the tax returns, IRS cannot tell you how to do your accounting books. 

Every Govt contractor must do GAAP accrual-basis accounting and there are 1000's of them using QB.

I suggest you should refrain from saying what every small business needs, when you don't know what  companies must do and when you don't even know what GAAP is.  You are misleading many people.

All Govt contractors are required to do GAAP accrual-basis accounting on their books but they choose

how they do their taxes, on cash or accrual-basis. They must also comply with the IRS of course and do.

@Rustler 

The link I clicked on that you posted here in this forum was to your website which has totally incorrect information did not say it was opinion.  It is stated as if fact so when I asked you about it here you gave me that exact same incorrect information right here. Do you understand why that is incorrect now? And how wrong it is to provide totally incorrect information to small biz owners who come here seeking assistance? 

Thought this may help clear-up your confusion on Govt employees vs. Govt contractors:  https://www.linkedin.com/pulse/government-vs-govcon-accounting-theresa-teri-wilt/