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darcyjane2020
November 9, 2023
Question

transactions in cash basis

  • November 9, 2023
  • 1 reply
  • 0 views

Hello, All.  I have a client who is on the cash basis but we invoice customers in QB.  Currently, the entries for invoicing are a debit to AR and a credit to Job Income.  When payments are rec'd, credit to AR and debit to cash.  My question is....since this is cash basis, is the credit to job income wrong when invoicing?  Since job income is only suppose to be credited when cash is rec'd, how should the invoicing, payments be set up?  Any help is most appreciated.

1 reply

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GenmarieM
November 9, 2023

Welcome to the Community, darcyjane.

 

I appreciate the detailed information you provided. I'm here to provide some insights about the invoicing and payments set up in QuickBooks Desktop. 

 

The setup is correct for your cash-based system. The invoice should be debited to accounts receivable (A/R) and credited to sales because you have yet to receive payment. Once you receive payment for the invoice, the A/R account will be credited, and the asset account will be debited.

 

 

You can visit this article for more information about setting up and sending progress invoices in QuickBooks Desktop: Set up and send progress invoices in QuickBooks Desktop.

 

If you need help with invoice setup, please don't hesitate to reply below. I'm more than happy to assist you in any way I can.

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darcyjane2020Author
November 9, 2023

Thanks so much for the reply.  So will by job income be correct at year-end?  Since it was credited when the invoicing happened and we are on cash basis, would it be overstated at year end due to invoices that are still open for payment?

Rainflurry
Rainflurry
November 10, 2023

@darcyjane2020 

 

"Currently, the entries for invoicing are a debit to AR and a credit to Job Income. When payments are rec'd, credit to AR and debit to cash. My question is....since this is cash basis, is the credit to job income wrong when invoicing?"

 

As long as you're using invoices to bill customers (not journal entries), QB will ignore open invoices when you run reports on cash basis.  If you run reports on accrual basis, then open invoices will show as income.  QB cannot differentiate cash vs. accrual using journal entries.   

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