Need help understanding the impact of changing an invoice $ amount IF Accrual ...

Graphics95 · ‎December 27, 2022

We are just now entering our data for 2022.

We have a situation where we have an invoice that we created in Dec of 2021 with a 'placeholder' amount.

The actual $ amount is higher, and that amount was paid in 2022. We are accrual.

We have already filed taxes for 2021. Is it correct that we can NOT change the $ amount of the original invoice (as that would skew our 2021 figures) OR will Quickbooks interpret the change as being made in 2022 and add the increased $ amount to 2022 sales, leaving our 2021 data accurate?

We have not 'locked' or 'closed' any periods of time in Quickbooks.

JamesAndrewM · ‎December 27, 2022

Thanks for dropping by the Community, @Graphics95.

I'll share some information about the effect of changing an invoice amount if accrual.

You may consider consulting with your accountant before making changes to the original invoice's $ amount, as this will affect your 2021 figures if not done correctly. If your accountant approves the changes, ensure that your sales taxes are corrected.

Furthermore, QuickBooks will not interpret the changes as being made in 2022 because entering a transaction and paying or receiving cash are two separate events. An accrual basis report shows the income and whether or not your customers have paid your invoices. Also, whether or not you have paid all of your bills.

For more detailed information, please refer to this article: Differentiate Cash and Accrual basis.

Additionally, you may visit this article to know more about what you and your accountant will need to do in QuickBooks to close out the previous year and prepare for the new one: Year-end guide for QuickBooks Desktop.

Feel free to reply to this post if you need further assistance. Have a great day ahead!

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JamesAndrewM · ‎December 27, 2022

Thanks for dropping by the Community, @Graphics95.

I'll share some information about the effect of changing an invoice amount if accrual.

You may consider consulting with your accountant before making changes to the original invoice's $ amount, as this will affect your 2021 figures if not done correctly. If your accountant approves the changes, ensure that your sales taxes are corrected.

Furthermore, QuickBooks will not interpret the changes as being made in 2022 because entering a transaction and paying or receiving cash are two separate events. An accrual basis report shows the income and whether or not your customers have paid your invoices. Also, whether or not you have paid all of your bills.

For more detailed information, please refer to this article: Differentiate Cash and Accrual basis.

Additionally, you may visit this article to know more about what you and your accountant will need to do in QuickBooks to close out the previous year and prepare for the new one: Year-end guide for QuickBooks Desktop.

Feel free to reply to this post if you need further assistance. Have a great day ahead!

Graphics95 · ‎December 27, 2022

Thank you, James so very much for your reply !

We forwarded it to our tax preparer and ended up making an additional invoice dated in the current year for the additional dollar amount, and paid both invoices. Problem solved.

We have been using using your great program for over 20 years for a small business that we own that is a 'cash based sole proprietorship'.

We purchased a small LLC and thought we should keep the accounting structure as it "had been", as accrual, and we now find ourselves with a lot of questions. Maybe you can help ?

From our long time experience with our other 'cash based' business, we developed the habit of entering an invoice (we call it a job ticket) for a job, but we often do not know the final dollar amount until the job is compete. With the 'cash based' business, this did not seem to be a problem, because it did not effect (affect?) our P&L reports. We would adjust the invoice as needed, until the job was completed.

BUT, we are realizing that with the accrual set up the figures we have entered (as estimates) are now an issue.

Do you have any idea what I am talking about, or do I sound like a crazy fool ?

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Need help understanding the impact of changing an invoice $ amount IF Accrual ...