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Resolve A/R and A/P balances on the cash basis B/S

The cash basis balance sheet (CBBS) should not show Accounts Receivable (A/R) or Accounts Payable (A/P) balances because these accounts track open (unpaid) invoices and unpaid bills. Many companies use A/R and A/P accounts and report on the cash basis. QuickBooks was not designed to be used in this way and reporting anomalies result. The only way to assure that cash basis reports have no anomalies is to use only transactions that do not affect A/R or A/P.

For the discussions below, please be aware that every QuickBooks transaction has one source account and one or more target accounts. You can view the posted accounts in any transaction by running the Transaction Journal report. The first line of the Transaction Journal Report shows the source account.  All subsequent lines in the transaction show the target accounts.

 

If this information does not answer your question, you can read discussions and post messages and questions relating to your issue on the Intuit QuickBooks Community site for free. You can contact an agent for additional guidance. Fees may apply.

Root cause transactions

 

Examples
  • Example 1: Open invoices that include Inventory Parts are included in the A/R balance on a CBBS. The amount showing in A/R account is the amount posting to the Inventory Asset account as a credit. (The Source account is A/R and the target account is Inventory Asset and both are balance sheet accounts.)
     
  • Example 2: Open bills that are entered to purchase Fixed Assets such as office Equipment will appear on A/P account on a CBBS.(Source account is A/P and the account is Fixed Asset and both are balance sheet accounts.)
     
  • Example 3: Open bills entered with Inventory Parts debit the Inventory Asset account credits A/P; (The source account is A/P and the target account is Inventory Asset both are Balance Sheet Accounts.)
     
  • Example 4: A General Journal transaction that has an expense account (source) as a debit on the first line and the A/P account (target) on the second line as a credit will show on a CBBS. Note: Reverse the lines by entering A/P account (source) credit on the first line and the expense account (target) as a debit as the second line. The transaction will not show on a CBBS.)
     
  • Example 5: A General Journal entry that has an Income account (source) on the first line as a credit and the A/R account (target) as a debit on the second line will show on a CBBS. Reverse the lines by entering the A/R account (source) as a debit on the first line and the Income account (target) credit on the second line the transaction will not show on a CBBS.
     
How to fix it.
KB ID# INF12397
10/24/2014 8:31:13 PM
PPRDQSSWS407 9102 Pro 2013 cc8828