Want to know the difference between the cash and accrual accounting methods, and how to switch between them? Keep reading!
Cash and accrual are two methods of showing the flow of income and expenses through your business. Depending on the method you choose, your reports will look a little different.
When you use the cash method in reports,
- your report will count income and expenses when you receive the payment or pay the bill.
|Important to note: If you've sent an invoice or received a bill, but the money hasn’t changed hands yet, your report won’t include it in your income and expenses.
When you use the accrual method in reports,
- your report will count income and expenses as soon as you send an invoice or record a bill, even if the payment hasn't been made yet.
Switch between cash and accrual accounting methods on your reports
You can generate a personalised report that uses one accounting method and another report that uses the other, and then compare the effects on your reporting.
To change the method used on an individual report:
- Go to Reports (Take me there).
- Select a report.
- Select Cash or Accrual under Accounting method. You can also select Customise to open the Customise report window and change the setting in the General section.
- Select Run report.
Talk to an accountant about which method's best for your company. For more information, visit find an Advisor.