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How does a Balance Sheet Report work in CASH basis?

How does a Balance Sheet report work in Cash basis? I can't seem to make sense of how it is choosing to remove sold inventory from the report. If an item is invoiced and the invoice is paid, it will remove the item from the list usually, but not always. If an item is invoiced and the invoice is still open it will not remove the item from the list usually, but not always. I even have an unpaid invoice in which some of the items are still on list while other items on same invoice are not??? I cannot make any rhyme or reason as to what it is trying to do and my numbers are not matching because of it. I need to get our year end reports to our accountant. Help?

3 Comments
QuickBooks Team

Re: How does a Balance Sheet Report work in CASH basis?

Help has arrived, dal1cas2.

 

I'd be happy to provide some clarification on how the Balance Sheet report works in Cash Basis Accounting Method.

 

Generally, when you run the Balance Sheet report using this method, it will only show paid transactions that involves Product/Service items or Liability accounts. Another notable thing is that Accounts Receivable A/R (Asset) and Accounts Payable A/P (Liability) won't be included on the report.

 

That said, it is interesting that the details showing up on your report don't seem to be consistent. It's possible your report is set to open under Accrual, instead of Cash. A quick and easy way to resolve this is to set your Accounting Method preference directly from your Accounts and Settings.

 

Here's how:

  1. Click the Gear icon.
  2. Select Account and Settings.
  3. Go to the Advanced tab.
  4. Click the edit (pencil) icon in the Accounting section.
  5. From the Accounting method drop-down menu, choose Cash.
  6. Click Save, then Done.

Doing this will guarantee that your reports will open under Cash Basis, and not Accrual. To learn more about this, I recommend following this article: Choose between cash and accrual accounting methods in reports

 

If you need to reach out for more help, feel free to call our Customer Care Team. They have specialized tools that can help you further with your Balance Sheet report. Here's how you can reach out to them:

  1. Click this link to go to our official Contact Us page.
  2. Choose QuickBooks Online.
  3. Select Running your business in QuickBooks, then Reports.
  4. At the bottom, click Get Phone Number.

That should get you going in the right direction. Let me know if there's anything else I can do for you. I always have your back and am always happy to help. Thanks for reaching out, wishing you and your business continued success!

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Re: How does a Balance Sheet Report work in CASH basis?

My understanding is that because there is no AR or AP in a QBO cash-basis B/S, all purchases of inventory that have been paid for are expensed, even if not yet sold, which apparently is not right. You are supposed to file taxes on the accrual basis if you carry inventory unless the annual sales are less than a threshold, in which case it is modified cash basis, which QBO apparently cannot do

Super Explorer *

Re: How does a Balance Sheet Report work in CASH basis?

Account was already set to CASH. If a credit is given on the invoice, could that be why it would only show partial inventory for that invoice, even if there is an open balance?

 

And if so, how would it choose which of the items on invoice to remove from the Balance Sheet?