Unlike the other Financial Statements (Balance Sheet and Profit and Loss Statement), the Statement of Changes in Equity report doesn’t provide an option to select the Accounting Method (Cash or Accrual Basis). Instead, it assumes Accrual Basis.
This creates a mismatch between the bottom line Net Profit (Loss) on the Profit and Loss Statement and the Profit (loss) for period line under Retained earnings on the Statement of Changes in Equity report. To provide an example, this occurs when an invoice has been received, but not yet paid, at the end of a period.
This issue, as well as reflecting a mismatch in information, can also lead to negative equity balances for companies with little operating leverage.
Can you please advise when the Accounting Method option can be added to the Statement of Changes in Equity report?