QuickBooks does not reverse any accruals you make for prepaid expenses or unearned income on the cash basis. It also does not reverse any A/R or A/P amounts that offset to balance sheet accounts other than Sales Tax Payable. In order to create a true cash basis Balance Sheet, you may need to enter journal entries to reverse accruals for prepaid income and expenses.
Using the totals from the filtered “Transactions by Account” report create a journal entry to adjust the balance in A/R and A/P. Enter reversing entries as of the first day of the following reporting period.