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Sales Tax - Cash Basis vs. Accrual
bpate
Member Posts: 4
All of my Q1 2020 invoices have been paid. So if I understand it right, my Sales Tax Report for that time period should give the same amounts whether I choose Cash Basis or Accrual. But there is a difference of $531.90. Can someone explain this to me?
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It sounds like a timing issue. If all of the invoices are dated within the quarter then there should not be a difference. However, if you made any payments, for say Q4 2019, in Q1 2020 there would be a difference. Without seeing the details of the reports it's hard to say, but that is where I would start looking.
Maybe you have a really old invoice that hasn't been paid? The cash basis is showing 531.90 more than the accrual basis in income or less than the accrual basis?
Hi MaxTax - Every unpaid invoice is dated within the past 2 weeks. The cash basis is more than the accrual basis.
Hi Brian - I haven't finished my research yet, but it is starting to look like you have me on the right track.
Thanks to both of you for your help.
Brian sent me in the right direction to figure this out.
Example - An invoice is created in Q1 but not paid until Q2. With accrual basis, the payment shows up in Q1. With cash basis, the payment shows up in Q2. This will affect the totals in the Sales Tax report and the P&L report (possibly other reports as well).