Sales Income Report: Cash Basis (Paid) vs. Cash Only

BillFlanagan

We had an issue with our 2020 Profit & Loss report. We are a cash based business. We toggled our Profit & Loss report to "Cash Basis (Paid)". We later noticed that the Sales income line item did not agree with our actual sales revenue based on invoice payments received in 2020.

We then generated a report for Sales income, and in that report there are 3 accounting basis options: (1) Accrual Based; (2) Cash Basis (Paid); and (3) Cash Only. If we toggle the Sales report to Cash Only, it agrees with our actual invoice payments received in 2020. However, if the Sales income report is toggled to Cash Basis (Paid), there is a line item added that sums all outstanding invoices from 2019 that were not received in 2019. However, those outstanding invoice payments were in fact received in 2020 and were captured in the Sales income report. As a result, those invoice payments were double-counted in our Profit & Loss report, since the Profit & Loss report (Cash Basis) was pulling in the Sales income based on the Cash Basis (Paid) setting.

What is the difference between "Cash Basis (Paid)" and "Cash Only" in the Sales income report? And why would it be adding a line item summing unpaid invoices from 2019? It also seems odd that the Sales income report has 3 basis choices whereas the Profit & Loss report has only 2 basis choices.

Can anybody help lend insight? Thank you!

JulianP

Hey @BillFlanagan !

When referring to your "Sales income report" I believe you are referring to your Account Transactions (General Ledger) report. Below are the primary differences when generating an Accural, Cash Basis, or Cash Only report:

• Accrual (Paid & Unpaid): Reflects all transactions, including unpaid invoices and bills.
• Cash Basis (Paid): Reflects all transactions except unpaid invoices and bills.
• Cash Only: Reflects transactions and paid amounts (both income and expenses) for Money in Transit and Cash and Bank accounts only.

These three options give you a better and more accurate picture of the fund movement tied to your business. You can learn more here.

If an invoice was recorded in 2019 but the invoice payment was deposited in 2020, the income from the invoice will be included in your 2020 report, not your 2019 report.