I am preparing my annual reports for tax purposes and I notice a difference in fixed assets on balance sheet and the fixed asset report. My business uses cash basis so the balance report is set up accordingly. The fixed asset report has no option. I would assume the two numbers should match between the balance sheet and the fixed asset report for the same date, but I am no accountant. Currently the discrepancy relates to invoices created prior to year end and paid after year end. Any advice is greatly appreciated.
You have provide the answer, you are operating on a cash basis, the cash paid after the year end can’t show up prior to the year end. For those to show you need to be operating on an accrual basis.
One way to solve the problem is to change the payment dates to last year or change to accrual accounting
Why do you need balance sheet on cash-basis? For tax purposes you only need profit & loss on cash bases.
Why? What’s wrong with accrual basis for tax purposes ?
Also, probably unintentionally, your comment seems to imply that you can have Accrual Balance Sheet & Cash Profit & Loss
Most small businesses pay tax on cash-basis.
You can… why not? Balance sheet on accrual-basis better represents your financial position.
Profit & loss statement on cash-basis is what you use as a basis to calculate the income (or corporate) tax.
@lubos grateful for your wonderful software, and for your rapid responses. So for now, I will carry my conversation to my tax accountant. I am only dangerous enough to get so far on my own. And I don’t have good answers to your questions…so I will update once I have that conversation.