Accounting Period

We are grateful that you are back in the Community forum, Sandy. We appreciate you using the Community to voice your concerns. Please allow me to provide you with some information on this.

I understand how convenient it is for you to choose the basis of accounting period you want to display in your QuickBooks Desktop.

The accounting period in QuickBooks is determined by the accounting method employed. When using the accrual basis, the accounting period is when you enter a transaction, pay, or receive cash. On the other hand, if you operate on a cash basis, the accounting period begins when you receive a payment or pay a bill. Moreover, how the accounting period is displayed is one of the features of the QuickBooks Desktop.

You might want to read the following article for more information on personalizing and adding specific information to your invoice and other form styles in QBO: Customize sales forms.

Visit this article to learn the difference between Cash and Accrual basis and how to set them as preferences in QuickBooks Desktop for Windows: Differentiate Cash and Accrual basis.

Keep us posted if you need further clarifications regarding the accounting period in QuickBooks Desktop. We're available 24/7. Have a nice day!

another useless answer from the QB Team (Thanks again)...

ONE real solution would be to do what EVERY accounting system does. Allow a batch of expenses to be entered with the date incurred, Then allow the user to go back in and pay the batch, on the real payment date.

Another more painful would be to have each LINE of entry carry it's own date.

Then the expenses line could be dated when incurred (along with a matching credit to A/P), and a payment (cash) line could be the true present date (along with a matching debit to A/P). The QB system should insure that the debits and credits to any date will net 0

QB is extremely frustrating in that they ABSOLUTELY MUST know of this problem, and therefore it's also painfully obvious that they have NO INTENTION of fixing it.

I replied in the other thread, but to restate:

It is shocking that QB has not addressed this after all these years.  Do they know anything about Generally Accepted Accounting Standards?  Just using this accounting system could make an auditor question the reliability of a company's financial statements. 

So, it's February 2023 and I receive an invoice (called a "Bill" in QB parlance) from a vendor dated November 11, 2022.  What is the solution?  Open a closed period in a closed year and enter the bill into payables?  OR put a FAKE invoice date to force it into the current period?  Does that sound like a good practice?  Any decent system has an accounting date for a transaction as well as recording the date on the document.

I would guess the lack of an accounting date is one of the main reasons companies outgrow QB early on.  Also, the QB Team's lack of knowledge on why this is even a problem does not inspire confidence.

Your reply does not address the OP's concerns and seems patronizing at the least.  As accountants, we KNOW the difference between accrual and cash-based accounting.  Fancying up a sales invoice has nothing to do with recording expenses on a cash or accrual basis!  

Let's use a utility bill and accrual-basis accounting as an example....but this would hold true for a whole number of expenses.  The utility bill is dated 03/05/2023 but is for services from 02/01/2023 to 02/28/2023.  The bill would be entered into QBO with the actual billing date (03/05/2023) and would therefore show up as an expense on the March P&L.  This is totally wrong.  This expense should show up in the February P&L.  If we had a "posting date". the bill could be entered correctly (03/05/2023) with a posting date of 02/28/2023 and the P&L would reflect the correct amounts.

I use QBO and don't understand why Quickbooks does not address this glaring issue.

My favorite is I run payroll for 01/01-01/31/23 and pay it out on 02/06/23. Even though the system pulls the hours from QB Time and clearly has the pay period for January, despite being setup on an accrual basis it books all expenses in February. This is not accrual accounting!

Hello there, @AliB2.

Let me share some insights about how QuickBooks Desktop (QBDT) tracks payroll expenses using the accrual accounting method so you can manage your transactions accordingly.

QuickBooks tracks your payroll expenses based on your paycheck date (02/06/23), not on your pay period (01/01-01/31/23). This is why the system booked your expenses and liabilities in February. With this, all your payroll reports, forms, and tax liabilities are based on the pay date.

If you wish to learn more about the accrual accounting method in QBDT, please see this article: Cash and Accrual basis.

Also, you may want to visit this page as your reference to learn more about how the IRS defines constructive receipt in recording payroll expenses: IRS Publication 334, Tax Guide for Small Business.

Please feel free to leave a comment below if you have other concerns about managing payroll transactions and accounting methods in QBDT. I'm always ready to help. Take care, and I wish you continued success, @AliB2.

My point exactly. This is called a cash basis not accrual basis.

QB needs to keep track of the paycheck date only to calculate the timing of the payroll tax deposits.  If the system knows the pay period end date then an accrual-basis accounting system should report the payroll and the payroll expenses on that date....NOT the paycheck date.

@Rea_M

Exactly.  Thanks for your "insight." We know how Quickbooks is posting payroll.  Our point is that QB is doing it incorrectly.  This is not GAAP (Generally Accepted Accounting Principals).  This is not even the Accrual method as defined by any accounting association.  I'm guessing this is an example of programmers or customer service attempting to explain accounting to accountants.  Repeat:  Quickbooks is posting to the wrong period.  It is being done incorrectly.