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Intuit

Differentiate Cash and Accrual basis

Learn the difference between Cash and Accrual basis and how to set them as preferences in QuickBooks Desktop for Windows.

Accrual basis

  • In this accounting method, the time when you enter a transaction and the time when you actually pay or receive cash may be two separate events.
  • An accrual basis report shows income regardless of whether your customers have paid your invoices and expenses regardless of whether you have paid all your bills.

Cash basis

  • A bookkeeping method in which you regard income or expenses as occurring at the time you actually receive a payment or pay a bill.
  • A cash basis report only shows income if you have received cash and expenses if you have paid cash.

Report preferences

  • Summary reports can be on a cash or accrual basis. They summarize groups of transactions and usually have the word Summary in their titles.
  • Detail reports list individual transactions. They always default to accrual basis when you create them from the Reports menu.

To set your preferences:

  1. Log in to your file as the Administrator. Make sure you are in Single-User Mode.
  2. Go to the Edit menu, then select Preferences.
  3. Select Reports & Graphs, then go to the Company Preferences tab.
  4. In the Summary Report Basis section, select Accrual or Cash.
  5. Select OK.

Important:

  • In QuickBooks 2018 and later, you can easily toggle a report between cash and accrual views. However, the report reverts to the default basis that was set up in the preferences once it is closed.
  • Journal entries that impact a Balance Sheet account, as well as an income/expense account, affect both cash and accrual basis reports.

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