DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Can't select accounting basis in reports


#1

Currently using version 18.5.22 (Mac) for cash basis accounting

Summary page is set to Cash basis

When I create a new report eg. P/L there is NO option to select the accounting basis

P/L reports which were created some months ago on an earlier version have been changed from Cash to Accrual basis

GST reports which were created some months ago on an earlier version have NOT been changed


Cash Basis Accounting
#2

Accounting method is relevant only if you have at least one sales or purchase invoice.

It seems like Summary will allow you to select accounting basis even if you don’t have any invoices but I’d consider this to be a bug. If you don’t have invoices, then accounting method is not relevant.


#3

Greaty software!

Are you saying that if there are NO invoices then the accounting method will be (by default) cash basis

To confirm - if a P/L report is generated by Manager and is listed as Accrual then it is actually a Cash basis report IF there are NO invoices


#4

That will be the case most of the time. I don’t want to say always because you could be entering your credit sales and purchases as journal entries, then your reports would be on accrual-basis but I believe you are not doing that so in your case all your reports are on cash-basis.

Correct. But if there are no invoices, then Manager shouldn’t show “cash basis” or “accrual basis” terms anywhere. If these terms are shown somewhere, it is a bug (e.g. when setting up Summary screen). It shouldn’t show as not to confuse users.


#5

Thanks for the swift reply

No worries then. Summary screen is probably not an issue. When you select Reports:Profit and Loss Statement the existing reports are listed as Accrual in the “Acounting method” column

If you create a new report then there is no option to select a basis - the saved report will be listed as Accrual


#6

Fixed in the latest version (18.5.28)


#7

@lubos, I don’t understand this. You seem to be saying that v18.5.28 removes the Accounting method option if you have no invoices. I have a test business which has no sales invoices and no purchase invoices. Yet on the Summary page (Set Period) and when creating P&L statements, the option for accrual or cash in an Accounting method dropdown is visible, just as it was before version 18.5.28.

Furthermore, I don’t see why you would want to eliminate the selection under any condition for several reasons:

  • Some tax authorities require an affirmative declaration of the accounting method being used.
  • When setting up a business, it is good practice to choose a method, even before any transactions are entered.
  • The difference between accrual and cash basis accounting has to do with more than whether or not you have entered sales or purchase invoices. The basic distinction is that accrual accounting recognizes income when earned and expenses during the same financial period as income they are related to. So, for example, a business could be accruing and recognizing income through billable time, but not yet have issued a sales invoice. Therefore, the associated expenses should be recognized. At the same time, cash expenses may be incurred that are related to a contract on which income will not be recorded until a later period; therefore, such expenses should not yet be entered. As a result, accrual and cash basis accounting can produce different results regardless of whether invoices have been entered. The two methods, rigorously applied, involve different accounting practices.

Can you explain in more detail what actually changed in version 18.5.28?


#8

Many thnks


#9

Can you create new test business to see if the issue is with one particular business or any business?

The issue is that Manager wouldn’t know if you are recording your transactions on cash or accrual-basis. You might not be entering invoices under Sales Invoices tab but if you are recording credit sales as journal entries?

If you don’t have any sales invoice or purchase invoice, then all options mentioning accounting method should be hidden.


#10

A brand new business does not present the Accounting method option. However, a business that has ever had invoices, even though they have all been deleted, does.

This was exactly my point. You might be following accrual practices and intend to account on an accrual basis, declaring such to the tax authority with your first filing. Yet Manager will treat your business as if you are on cash basis.

If you are doing this, the modified scheme does not permit accrual accounting, which would be necessary.

This is what I was afraid was true. That is why I asked for clarification. For reasons I listed in my previous post, I think this is wrong, because it prevents users who need to properly set up and use accrual accounting from doing so unless or until they enter invoices. And some may not ever do so.


#11

WHY make something simple (accrual v’s cash) into something more complex by creating artificial exception conditions which potentially could expose both the programme and/or users to conflicts. The USER should always be the “only” determiner of their accounting basis. The programme shouldn’t be imposing upon the User an accounting basis just because a User hasn’t entered a conditional type of transaction.

In addition, accrual basis should always be the default accounting with cash basis being the option. The entering of Sales / Purchase invoices or not shouldn’t be the determinant of the accounting basis even though they are the accounting basis differential.

Cash accounting only ever came about because tax department “bureaucrats” got involved in accounting to please whinging tax payers.

From a personal perspective, of all my businesses, at least half have never issued a sales invoice, (some have never receive a purchase invoice), yet they all require accrual basis accounting transactions to enable appropriate financial and tax reporting. To think that one would have to create an artificial sales invoice just to enable the Accrual Basis status is well - unthinkable.


#12

I could not agree more with @brucanna’s first two paragraphs. Whether tax bureaucrats were involved in cash basis accounting, I don’t know. But I’m right back on board with the final point.

I’ll go one step further on a point I made earlier. I said that some tax authorities require affirmative declaration of accounting method. I should have added that sometimes, the tax authority requires accrual accounting, based on business type, presence of inventory, or other factors. And permission is required (though seldom given) to depart from the rule. Yet such a business could operate entirely on a cash sale/purchase basis and never issue either a sales or purchase invoice. Under those circumstances, there could still be differences between cash and accrual accounting.

As I see it, the choice must reside with the user, not the program.


#13

Currently using version 18.9.14 (Mac) for cash basis accounting

Summary page does not show accounting basis - cash or accrual

When I create a new report eg. P/L or GST there is NO option to select the accounting basis

Reports which were created some months ago on an earlier version have not been changed from Cash to Accrual basis

New reports which are created seem to arbitrarily select accrual basis or do not indicate WHICH basis is used for that report. P/L have no basis listed. GST have Accrual basis listed.


#14

Same on 18.10.20


#15

Currently accounting method is only available / selectable if you have at least one sales or purchase invoice. If you re-read this topic you see that this change was opposed to but remains.


#16

Problem is:

  • there is no Sales / Purchase invoices and never has been
  • that cash basis is not selectable anywhere
  • P/L are using an unknown type of accounting. GST is now using Accrual

I now have half of a year on cash and half on accrual

As noted “The USER should always be the “only” determiner of their accounting basis”. and “As I see it, the choice must reside with the user, not the program.”


#17

If there are no purchase/sale invoices then Cash Basis is the default, not selectable.

How are you determining that ?

What you can do, under Customise, activate the Customers and Sales Invoices tabs.
Create a Customer and a zero value Sales Invoice and then the Accrual/Cash options are available. Check your various reports by switching between the two - accrual & cash.

Delete the Sales Invoice and only the default “Cash” basis will be available.


#18

“How are you determining that ?”

Because the printed report writes the accounting basis on the second or so line of the GST report. The P/L statements don’t include the basis.


#19

In my opinion, this illustrates why it is critical to restore the ability to select cash or accrual with or without invoices.


#20

“I now have half of a year on cash and half on accrual”

Are you saying that your suggested process to select cash accounting will fix this.

This business, on the advice of it’s various accountants, has been using cash basis for some 35 years.

Curiosity - why was it OK to fix the selection in 18.5.28 and when was it re-removed