Thanks, @john-pero .  I guess then there is no way to record as a prepaid expense and still be able to see the full payment hit the P&L when running a cash basis statement? 

I'd like to know it as well.
I have some prepaid expenses in Dec2020 that I need to split into 12 months for 2021 into the accrual method, but I need to recognize it as a payment in Dec for the cash basis.

It must appear as Prepaid Expense on the Balance Sheet.

Let me provide some information about Cash Basis reporting, joelcbonaldi.

In QuickBooks Desktop, the Cash basis report only shows income if you have received cash and expenses paid by cash. While the Accrual basis report shows income regardless of whether your customers have paid your invoices, expenses, and all your bills.

For more details about this one, check out this article: Differentiate Cash and Accrual basis. 

Here's how you can record prepaid expenses in QuickBooks Desktop.

1. Create a current asset account called Prepaid Expense

2. Using the account created in Step 1, enter payments to the vendor.

3. Create a memorized journal entry to allocate one month or a quarter of the expense.

4. The entries will record according to the frequency you selected, reducing the Prepaid Expenses account each period.

5. If the user has multiple prepaid expenses to track, it is suggested that they create sub-accounts of the Prepaid Expenses account in order to track each separately.

Please feel free to review this article for more details: Record and allocate Prepaid Expenses.

For additional guidance in choosing the right accounts to use for your business, I'd recommend contacting your accountant. They're the best person to help correct your books as well. 

I've also included an article that'll help you check the complete list of workflows and other vendor-related transactions:  Accounts Payable workflows in QuickBooks Desktop.

Reach out to me if you need further assistance when working in QuickBooks. I'll be glad to lend a helping hand. Have a great day ahead. 

Hi @LeizylM!

Thank you for the reply. But I'm not using the desktop version, but the online one.

Also, I've tried to do it as a cash payment against Prepaid Expenses account, but yet it won't appear on the P&L cash basis report.

Would you have another suggestion to make it works?

Thank you

Hello @joelcbonaldi, thanks for getting back to us and for clarifying the product you're using. It's a big help for me to provide further details and accurate information about your concern.
 

There are a few things that we'll need to consider doing. First is to make sure that the Prepaid Expenses account is active on the Chart of Account (COA) page. Go to the account lists and search for Prepaid Expenses account.

If it's showing as active, let's go ahead and double-check the Account Type and Detail Type of the Prepaid Expenses account. It could be it is set to asset type, that's why it's not showing in the Profit and Loss report. To correct it, follow these steps:

1. Still, within the Chart of Account tab, look for the Prepaid Expenses account.
2. Under the Action column, click the drop-down arrow. Then, select Edit.
3. Correct the Account Type and Detail Type to expenses.
4. Then, hit Save and Close to reflect the changes.
   

Afterward, you can then pull up the Profit and Loss report. Note: Set the reporting period to the correct ones to view the data you need. Please take a look at this sample screenshot below:

To learn more about handling QuickBooks reports, feel free to check these articles:

• Learn how to get the most out of your financial reports. 
• Memorize reports in QuickBooks Online.

I'm always here whenever you need help with QuickBooks. Take care and enjoy your day!

@LeizylM if I set the Prepaid Expenses as a Expense account so it will appear at P&L, it won't show at the Balance Sheet if I move to accrual.

Thing is that I need both views (accrual and cash basis), as we are moving from cash to accrual method.

Hi there, jeanne05201.

Thanks for getting back to us, joelcbonaldi.

I'm here to provide some insight into the QuickBooks report. 

Accrual basis will only show transactions that haven't been paid yet. With the accrual accounting method, income and expenses are recorded when they’re billed and earned, regardless of when the money is actually received.

To change the method used on an individual report:

1. Go to Reports.
2. Choose a report.
3. Select Cash or Accrual under Accounting method (you can also select the Customize button to open the Customize Report window and change the setting in the General section).
4. Select Run report.

You can customize an individual report to use a different accounting method and compare the results using a private browser and log in to your account. 

For more details, you can read through these articles on how to run a Profit and Loss report by bank account.:Run a Profit and Loss report by bank account in QuickBooks Online

I'm always here whenever you need help with QuickBooks. Take care and enjoy your day!

@AbegailS_ Hi!

Thank you for your reply, but the problem here is about the transaction itself, not the reports.

Joining the thread to help with your questions about cash and accrual reporting, joelcbonaldi.

First, the Balance Sheet report will only show your assets, liabilities, and equities. Expenses are reported in your Profit and Loss report. Check out these articles for more details:

• What is a Balance Sheet Report? 
• Why Are My Income and Expense Transactions Missing from My Profit and Loss Report? 

Second, can you tell us the date of the pre-paid expenses? To show them as cash-based entries, they'll need a transaction date that belongs to December. QuickBooks will only report transactions that were paid during that month if set to cash basis.

Lastly, there's no option to show the transactions on the same date for both cash and accrual reporting. We would recommend reaching out to your account for further advice. 

Feel free to check out these articles for additional guidance and future reference: 

• Customize Reports in QuickBooks Online
• Common Custom Reports in QuickBooks Online

We're always here if you need more help when working in QuickBooks. We'll make sure everything is sorted out. 

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@joelcbonaldi wrote:

@LeizylM if I set the Prepaid Expenses as a Expense account so it will appear at P&L, it won't show at the Balance Sheet if I move to accrual.

 

Thing is that I need both views (accrual and cash basis), as we are moving from cash to accrual method.

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Prepaid Expenses are a current asset , not an expense, yet. For expenses to properly post to each month over the course of a year you need to use PPE as a current asset, as outlined several times above, and each subsequent month where a zero balance check or journal entry (I like the checks better since names do not report out of journal entries) that credits prepaid "expense" and debits current expense. For all practical purposes, accrual and cash expense for spreading out a prepaid expense IS EXACTLY THE SAME as each hits in the proper month.

If you were to record a vendor bill for the full year as of 1/1/21, with 12 monthly payments to follow, accrual basis would be 100% expense on day one and cash basis would be 12 monthly expenses. Conversely, paying 100% up front, with 12 monthly bills to follow records cash basis 100% on day one and 12 monthly accrual expenses to follow.

It boils down to IF you want or have to SPREAD OUT the expenses over time.  Even a hybrid cash (accepted by the IRS) allows you to spread out the expenses of 12x cash payment up front over the 12 months since services or products have NOT been provided in totality when you paid.