DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Can't select accounting basis in reports


#21

You can only try it - you can switch between accrual and cash without any impacts.

Unsure why this occur, because your accounts an only be accrual or cash, not both
You will need to show screenshots to illustrate.

You could try deleting one transaction and re-enter to see if that corrects it.


#22




#23

I agree with @arnen that this appears to be a bug. It only occurs for the “GST Calculation Worksheet for BAS” report.

If there are no sales/purchase invoices then there is no option in the edit screen of this report to select either the cash or accrual basis but the report has a default heading of “Accrual basis” when it should be “Cash basis” (when no sales/purchase invoices have been entered).


#24

Then I will list this as a bug based on @lubos comments from above

“If you don’t have any sales invoice or purchase invoice, (which both @arnen and @AJD have stated as being the case) then all options mentioning accounting method should be hidden” and “Manager shouldn’t show “cash basis” or “accrual basis” terms anywhere. If these terms are shown somewhere, it is a bug”.


#25

Curiosity - which version removed the fix from 18.5.28


#26

In versions prior to 18.5.?? regardless of there being Sales / Purchases Invoice transactions or not the user had the friendly option of selecting their required accrual or cash basis.

From that version 18.5.?? onwards, the User option to select accrual or cash basis was removed and the selection will now only occur when there are Sales / Purchases Invoice transactions.

In version 18.5.28, your reported situation (repeated below) was apparently fixed:
“When you select Reports : Profit and Loss Statement the existing reports are listed as Accrual in the “Accounting 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”

It is assumed that the above - P&L Reports - is still fixed. However your current GST situation is ever a separate matter or was not covered (included) in the in the 18.5.28 fix.


#27

October 10

In versions prior to 18.5.?? regardless of there being Sales /
Purchases Invoice transactions or not the user had the friendly option
of selecting their required accrual or cash basis.

From that version 18.5.?? onwards, the User option to select accrual
or cash basis was removed and the selection will now only occur when
there are Sales / Purchases Invoice transactions.

In version 18.5.28, your reported situation (repeated below) was
apparently fixed:
“When you select Reports : Profit and Loss Statement the existing
reports are listed as Accrual in the “Accounting 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”

It is assumed that the above - P&L Reports - is still fixed. However
your current GST situation is ever a separate matter or was not
covered (included) in the in the 18.5.28 fix.

Except that the GST reports created post 18.5.28 worked correctly until
a few months ago - the GST reports prior to the most recent are all
listed as cash basis.


#28

The “5” in version 18.5.28 indicates the month of MAY.
Your GST Worksheet for the March quarter would have (?) been created prior to that update.
Your GST Worksheet for the June quarter would have been created after that update.

Therefore your Cash Basis report is prior to version 18.5.22 (as stated in your opening post) and the Accrual Basis report is after that version. So it appears that the changes to the Cash / Accrual Basis processes has had an impact on the GST Worksheet titles.


#29

Isn’t “cash vs accrual” one of the very first things anyone learns about accounting? If someone is using this software, the option to choose between the two accounting methods, shouldn’t confuse them.

I agree with the rest of this thread, that more user control should be given, not taken away. Especially in an area where compliance can get sticky.


#30

I think it’s unfortunate Manager has accounting method option anywhere in the program.

Instead of Accounting method drop-down box to select between Accrual basis and Cash basis, perhaps there should be an option that says:

Exclude unpaid invoices instead. If you don’t have any invoices, then option can be hidden altogether.

The reason why is because if you don’t have any invoices, how does Manager know if you are doing your books on cash-basis or accrual-basis. There is no way to know.

Yeah, the program could assume if you don’t have any invoices - then it could always assume you are doing books on cash-basis and show Cash-basis title. But…

What if you are an accountant using Manager as glorified report generator where you enter journal entries to set up figures. And these figures are on accrual-basis. Then accountant goes to print Profit & Loss Statement and Manager says Profit & Loss Statement is on Cash-basis ? That would be major non-sense.

The reason why option Accounting basis is hidden when you don’t have any invoices is because this option doesn’t do anything without invoices. The figures are the same regardless what you choose. It’s like a button in elevator to close the door although the button doesn’t do anything - it just makes people feel good pressing it.

Obviously, I do want to make the program to meet expectations of who is using it but introducing options which do nothing at all is not what I’m keen on.


#31

WHY ?

The default in accounting historically is accrual accounting yet that option, which use to work perfectly well within Manager, has been removed without any justification.

Cash accounting has absolutely nothing to do with a business issuing invoices or not. Cash accounting only relates to how the business chooses to report it’s income for taxation purposes. Income taxation is only an adjunct, off balance sheet accounting transaction.

Cash accounting only came about so that businesses who had unpaid “invoices” at the financial year end didn’t have to pay tax on that unpaid income. It resolved a potential cash flow problem - having to pay tax on income that hadn’t yet being received.

Why introduce an unconventional (foreign) concept whereas Accrual Basis and Cash Basis are universally understood

Manager doesn’t need know (predict) what the User is doing - that choice is for the User to decide (not for Manager to second guess) which is what Manager use to have as its default and this never caused any issues.

Only when Manager started thinking that it knew best what the User wanted did this issue occur. Manager doesn’t have to think for the User, it just needs to respond to how the User instructs.

This is where Manager’s assumptions are TOTALLY wrong. Accrual accounting has nothing to do if a business issues invoices or not. Accrual accounting has everything to do with the accounting convention of revenue/cost matching and to follow this convention doesn’t necessarily require the involvement of invoices.

Currently Manager is forcing Users to create an artificial/fake invoice to achieve Accrual Basis accounting titled reports.

So the question is - should Manager be forcing Users to act in such an unorthodox way just so they can get basic accrual basis accounting reports.


#32

I strongly agree with everything @Brucanna said in the previous post, @lubos.

I also reiterate comments I made in posts #7 and #9 of this thread. It only makes sense to allow the user to select the accounting basis when a business is first established. That is a fundamental accounting choice that should be reflected and followed from the start. And it is completely separate from whether the business has raised a sales or purchase invoice.


#33

I agree with @Brucanna


#34

I agree with @Brucanna


#35

I do not support this pretence. Why should a business be locked forever into a particular basis.
As a business matures, its more likely to evolve towards accrual basis if it starts as cash basis.

Besides, a business may want to use through out the year accrual basis for management reporting, but convert to cash basis for year end taxation reporting, and a business should always be allowed to have that flexibility - which is what Manager use to allow very efficiently and effectively before it was “unnecessarily” removed.

Furthermore, if a business elects to use cash basis and in the future requires to apply for finance, then it’s more than likely that the lending body will want to see “full” financials, that is accrual basis reports. Why should they be prevent from doing this because of a decision that was made before they had even traded.

Accounting software shouldn’t be about putting business structures into straight jackets.

It is not a fundamental accounting choice at all, it is an elective choice as to how the business requirements are perceived at that time - start up. It appears that many Manager users are business owners who are doing self accounting, therefore, for them to be locked into a “fundamental” choice when they don’t even fully comprehend debits and credits is just incomprehensible.

But, getting back to Lubos comments - for a number of years Manager provided an efficient and effective “selectable accounting basis options” which worked perfectly, wasn’t broken and didn’t need any fixing yet it was removed. However, over that same period there have been many users who have repeatedly requested improvements which have a “daily” impact on their business’s efficiency and yet these remain broken and unfixed, ensuring a negative financial impact upon their business. This odd focus is bewildering.


#36

I did not say the selection should be locked forever. I said the option should be allowed. That is no pretense. In fact, it is exactly the same point of view you have been arguing so strenuously for months.

Yes, just as you pointed out, it is entirely possible that a business starts on cash basis, then makes the decision to move towards accrual, but does not have any invoices and would be prevented from doing so.

I agree completely with you about both points, as I’ve said more than once in this thread.

From a dictionary definition of fundamental: “forming a necessary base or core.” There can be no question when using Manager that you must use either cash or accrual basis, as the program does not include any hybrid alternatives. Therefore, it is a necessary decision, no matter when it is made or changed, including when a business is first established.

I am agreeing with you, @Brucanna, that the flexibility to make that decision at any time should be restored to the user. Otherwise, s/he is locked into a decision made by the programmer. That position is identical to yours. You need to learn to accept agreement.


#37

I think this is the main point to discuss, here:

To everyone else: Let’s forget about how to change the accounting basis, or when to change it. Instead, how about the focus be redirected to the following:

Give an example of a financial value that should change in a report, for a business that does not have invoices.

It has been said that a business owner will want to switch between cash/accrual basis. Okay, but what is affected when they do?

My understanding (not being an accountant) is that the change only affects whether a payment has been made or not. And I can’t think of a place that you would store in Manager that you are expecting to receive a payment, but haven’t received it yet, other than Sales Invoices.

Is there another place you would indicate that you’re expecting to receive money, but haven’t yet received it? If not … what is the difference on an accrual-basis and cash-basis report?

Where is this revenue / cost matching stored … in a way that impacts on accrual vs. cash basis … except in invoices? Honest question.


#38

You have a substantial cash sale on the last day of the month, say 10,000, but the costs, say 6,000, related to that sale aren’t received until the next month.

Therefore under cash accounting your profit for the month will be 10,000.
Under accrual accounting you would take up a Journal Entry for 6,000 so that the profit for the month would be a more accurate 4,000.

Therefore to answer your question, both the BS Liabilities and the P&L Expenses financial values would change in a report.

Noting that the reverse can also occur, cash payment this month and related cash sale next month but then it would be BS Assets and P&L Income that would change in a report. Also noting that the above example is rather simplistic as it involves only one situation whereas a business may have many mixed situations with both invoiced & non-invoiced.

But you need to understand that accrual basis is an accounting process (not a reporting process) based on the revenue / cost matching convention, the result of which is reflected in the reports.

Also, with regards to invoices, that both sales and purchases invoices can be involved.

Hopefully the above illustrated example answers this - it’s stored within the involved transactions.

As an aside - I operate businesses that have never processed a sales or purchase invoice (being cash only transactions) but due to the timing differences that can occur (this month/quarter v’s next month/quarter) with revenue & expenses they constantly require accrual basis adjustments over the accounting periods so that the actual rather then distorted performance can be reviewed.


#39

Here is another example I mentioned briefly in an earlier post.

Someone starts a services business, billing for time. Projects are lengthy, with invoicing planned upon completion. For the first several months, no invoices are issued. But billable time has been entered. Therefore, under accrual accounting, income should be recognized. Likewise, because of the revenue/cost matching principle, related cash expenses are also recognized. Three months on, the end of the calendar year comes, and income taxes must be filed. The business has taxable income, but because accrual basis cannot be selected due to lack of invoices, the work in progress is not shown in the Billable time - movement account. So the P&L looks like the business suffered a loss, while it actually had a taxable profit.


#40

Agreed, but when a user writes a constraining definitive statement which doesn’t appear to allow for future options then there are going to be challenges. Emphasis is mine.

“It ONLY makes sense TO ALLOW the user TO SELECT the accounting basis when a business IS FIRST established.”

No second chances.