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Grindstone1
03-25-2010, 02:31 PM
Hello Everybody !

I have been using Quickbooks for many years. When I recently started my S-corp I decided to use Quickbooks more indepth to create Accrual Reports as we run in the cash basis. I have always done Accrual manually on the side in excel. I use 2010 Pro.

I got the Accounts Receivables (income) set up and the Vendors (expenses) and those parts were displaying correct whether the P&L Statments were cash or accrual. Now the part I couldn't get to work was the Employee paychecks. The reports always shows paychecks in the cash basis, when the checks were paid not by pay period. Is there anyone who has been able to make this work and can you tell me how you do it? If not then maybe another suggestion how a good way is to do Accrual Accounting along side Cash.

So I called Intuit and worked with 2 different techs, one even took control of my screen so we could show each other what was going on. The last tech told me that it is a "limitation of the program" and couldn't be done :confused:. Now if that is true that means that all Accrual reports in Quickbooks are incorrect, but what about companies that only do Accrual and dont use the Cash basis. One way to get around it is to reclassify all Employees as Vendors and since I use a payroll service I might be able to get away with it but it wouldn't work if I decided to do payroll in house as I'm considering.

Thanks for your help !! :)

Evan
03-28-2010, 12:10 AM
QuickBooks does have known limitations which I'm all too familiar with.

The only way to force it to do what you want, often times, is with journal entries. If payroll is outsourced, presumably they give you information to input. Until that happens, there is nothing to accrue, so the accrual method is essentially working on a cash basis.

Try creating a journal entry to accrue payroll instead.

Debit Salaries & Wages Expense $100
Debit Payroll Tax Expense $20
Credit Salaries Payable $80
Credit Payroll Tax Liabilities $40

It's a very rough entry... but it should work. When you write a check then for this payroll, you offset the liability accounts. And when that transaction occurs, it should show up on the cash side of the report.

But if you run on a cash basis, why do you prepare accrual reports? After year one, your reports won't be very comparable.

For example: You had a $5,000 sale on December 1. It arrives in the mail January 15th.

Under the accrual method, that $5,000 is a Year 1 transaction. Under the cash method, it is Year 2.

When you create a report the following year, you're always going to have this $5,000 fluctuation.

It's similar for expenses accrued to Year 1, but actually paid in Year 2 -- such as payroll expenses, etc.

Grindstone1
03-29-2010, 04:27 PM
Thanks Evan !! :D

I appreciate your input Evan. It looks like many people read my post but your the only one to comment. Maybe I'll ask all the Cash people if they look at accrual.

The reason I have to look at the Accrual reports too is so I can see how we did for a certain month or year. Cash reports don't reveal that information. I bill on a monthly basis, payroll is twice a month, bills are paid monthly so it makes sense to look at things on a monthly basis.

I'll look into your journal suggestions.

So Evan does that mean that any company that uses Accrual Accounting can't use Quickbooks? I was hoping that if there are some of them out there they would chime in to reveal their secrets. :cool:

Evan
04-11-2010, 12:13 AM
Any company that uses accrual accounting can use QuickBooks, but you need to know how to record accruals and deferrals as necessary.

If you were on a true accrual basis, you'd also be accruing income taxes (if the entity itself is taxed, such as a C-Corp), etc. Don't forget about depreciation being recorded monthly.

But the reality is, it's impossible for accrual accounting to work 100% unless the person generating the report knows the ins and outs of accrual accounting.

Generally speaking, if you use QuickBooks, and you print out a balance sheet and income statement... You can subtract A/R (sales not collected) from Sales, to get a cash-basis amount of sales (though its possible you may have some prior year sales in that total, so be careful). You can do the same with the payables. It provides you a rough cash/accrual difference.