Choose accrual- or cash-basis accounting

•   About choosing the accounting method

  When you first started your business, you needed to decide which bookkeeping method to use: accrual or cash. You had to specify which system you use when you filed your first tax return, but your bookkeeping method also affects how income, expenses, and account balances are shown on the applicable business reports, in the Business tab snapshots, and the Tax Planner.

  You can set the accounting method one report at a time or for all applicable reports at once. Quicken uses cash-basis accounting by default.

Click the topic below for the item you want more information about.

•   Set the report basis for one report at a time
  1. Click the Business tab
  2. Click the Reports button, and then select the report you want.
  3. Click Customize.
  4. Click the Advanced tab.
  5. In the Report Basis area, select Cash or Accrual.
  6. Click OK.

     Notes

     Cash and accrual basis don't apply to all business reports. You must select an applicable business report for the option to appear on the Advanced tab.

•   Set the report basis for all reports at once

  You can select which accounting method Quicken uses to present data in the applicable reports, Business tab snapshots, and the Tax Planner.

  1. Choose Reports menu > Reports & Graphs Center. (Do it for me)
  2. Click Preferences.
  3. In the Select preference type list, select Reports and Graphs.
  4. In the Select preferences area on the right, select the appropriate option (which will apply to only the applicable business reports):
     • Clear the Cash-basis reporting if applicable check box to have Quicken automatically set to accrual basis every one of the applicable business reports.
     • Select the Cash-basis reporting if applicable check box to have Quicken automatically set to cash basis every one of the applicable business reports.

Notes

•   What is cash-basis reporting?

  A method of bookkeeping in which you regard income or expenses as occurring at the time you actually receive a payment or pay a bill. A cash-basis report shows income only if you've received it, and expenses only if you've paid them. For example, if you haven't received a payment for an invoice yet, a cash-basis report on your sales doesn't include the amount of the invoice.

•   What is accrual-basis reporting?

  A method of bookkeeping in which you regard income or expenses as occurring at the time you ship a product, render a service, or receive a purchase. Under this method, the time when you enter a transaction and the time when you actually pay or receive cash may be two separate events.

  In Quicken, an accrual-basis report shows income regardless of whether all your customers have paid up, and expenses regardless of whether you've paid all your bills.

•   Which reports can you select a report basis for?

  You can set the report basis for any applicable business report.

•   Can I change my reporting method?

  Your bookkeeping method determines how you report income and expenses on tax forms. You must select a bookkeeping method when you file the first tax return for your business. After that, if you want to change your bookkeeping method, you need permission from the IRS. For more information, talk to your tax professional.

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