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Level 2

Toggle Between Accrual and Cash Basis

*Version: QB Desktop Pro Plus 2022* Our company switched to accrual basis starting 1/1/22.  However, we still need to use Cash basis for our taxes.  When I toggle to Cash Basis while in the P&L report, our cash payments received year-to-date aren't reporting in Income, instead the A/R entries are.  Starting 1/1/22, we record month end journal entries with a debit to A/R and credit to Income.  When the actual payments are received via bank feed, we have rules for the transactions to debit checking a/c (Cash) and credit A/R. Could this be why our Cash basis isn't reporting correctly?  Is it not possible to switch between the two methods if you record income in journal entries?  I contacted QB help chat and they couldn't figure it out.  They think our company file is damaged and I had to upload it for them to troubleshoot.  But it's been almost two weeks with no response.

4 Comments 4
Community Champion

Toggle Between Accrual and Cash Basis

On a cash basis, the income recorded in AR should be reported as such, but on the date(s) payments are received, and not the date of the invoice (or of a Journal, if recorded using the AR account as the first row of the Journal, like an invoice.)  Is this what you're seeing?


Note that cash bases transaction detail reports involving AR and AP can be extremely confusing. The gyrations that QuickBooks goes through to convert accrual basis AR and AP transactions to cash basis for reporting can melt your brain if you try to figure them out, but usually they are right in the end.

Level 13

Toggle Between Accrual and Cash Basis



"Is it not possible to switch between the two methods if you record income in journal entries?"


You nailed it - that's the problem.  In order for QBD to accurately switch between cash and accrual, you must use invoices and bills for all receivables and payables.  This is because QBD uses the invoice date/bill date for income/expense as the date of recognition on your financial statements for accrual-basis taxpayers.  For cash basis taxpayers, it uses the date the payment is received or made.  Journal entries bypass that ability.     

Level 2

Toggle Between Accrual and Cash Basis

Thank you for your reply!  We speculated that the J/E's were the problem.  Assume we reverse all the previous journal entries and begin using invoices.  We are a healthcare provider that bills hundreds of claims monthly to various insurers (Customers) and this is all done using software outside of QBD.  We run reports at month-end to get our total monthly income.  (This is what we used to create the J/E's).   Can I create a separate invoice for each Customer for the monthly amounts?  The next issue is, how to match the payments received in the Bank Feed to the outstanding invoices?  Our customers remit to us EFT's that include batches of claims that are from various prior periods.

I appreciate all replies and suggestions!! 

QuickBooks Team

Toggle Between Accrual and Cash Basis

I appreciate your quick response, Sally.


Yes, you can create a separate invoice for your customer. I'd be glad to show you how.


  1. Go to the Customers menu in your QuickBooks Desktop (QBDT), and select Create Invoices.
  2. From the Customer: Job drop-down, select a customer or customer job. 
  3. Fill in the relevant information 
  4. Select Save & Close.


You can also see this article for the complete details: Create an invoice in QuickBooks Desktop.


Once your customer pays their invoice, you can refer to this resource on how to record it in QBDT: Record an invoice payment.


In regards to matching the payments to your bank feeds, you'll want to ensure you deposited the payments to your preferred account. Then match them to your deposits.


If you've deposited them to your undeposited funds, you'll want to record a bank deposit and select your preferred account. This way, you can match them to your bank feeds. Furthermore, I'd recommend working with your accountant for additional guidance. This way, we can ensure the accuracy of your accounts.


Additionally, I got you this article that can guide you in seamlessly matching your bank and QuickBooks balance: Reconcile an account in QuickBooks Desktop.


In case you have other clarifications about your invoice and bank feeds, you can always leave a reply. I'll get back to you as soon as I can. Keep safe! 

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