Todd, The major difference between cash and accrual accounting is to do with the timing of when you record events in your book, i.e. the dates at which you record the transaction. The primary aim in accrual accounting is so that any expenses and the income earned from incurring those expenses are recorded in the same accounting period irrespective of when the money/cash actually changes hands. An invoice is usually issued when the work earning the income is done/completed and the income is recorded in your books at the date of issue of the invoice. That is one of the objectives of the invoice and the accounts receivable system, it provides recording of income at the time of issue of the invoice, not when payment of the invoice is received. When you issue the invoice is under your control not GnuCash's.
With expenses in accrual accounting, they will not necessarily be recorded as expenses at the time at which you pay for the goods but might, for example, be recorded as an asset "inventory" on purchase and then the expense will be recorded against the inventory at the time you do the work for a particular job, i.e. when the expense is incurred in earning income. Again a purpose of the accounts payable is to maintain that separation in timing of the recording of the actual incurring of the expense and making the payment for it. In cash accounting the taxation authority does not require you to maintain that relationship between income and expenses in your books and the income and expenses are generally recorded in your books at the time payment is made or received rather than when the work earning income or incurring expense is actually performed. It is not what GnuCash does with the data internally that is different, just the dates/timing at which you make entries, create invoices etc into your books that are the difference. The specific rules of course depend on the legislation in your jurisdiction, usually the applicable taxation legislation. While GnuCash is set up to support accrual accounting with the business features, it can equally be used for cash accounting but then some of functions the business features are then not necessarily going to work as you would expect them to with accrual accounting, e.g. control of ageing of receivables, control of some aspects of cash flow etc. David Cousens On Tue, 2025-03-11 at 09:27 -0600, Todd Gould wrote: > My apologies for the confusing wording. I do mean cash basis. > > Sadly, we do also need to invoice, so.... the question remains > > On Tue, Mar 11, 2025 at 9:15 AM Michael or Penny Novack via gnucash- > user < > gnucash-user@gnucash.org> wrote: > > > On 3/10/2025 7:03 PM, Todd Gould wrote: > > > I have noticed various older historic discussions regarding the > > > lack of > > the > > > ability to perform Cash Basis reporting - especially for small > > > business > > > purposes. > > > > > > Is this feature on the development radar anywhere? How can we > > > get it > > > prioritized more highly please? > > > > > a) You CAN use "cash basis" even for small business/organizations. > > The > > only PITA is unable to use invoicing (except by work arounds). If > > your > > small business does not do much invoicing, the work around not too > > cumbersome. > > > > b) But you said "cash FLOW basis". Gnucash can do cash flow > > reporting > > but that has nothing to do with cash FLOW. > > > > Michael D Novack > > > > > > _______________________________________________ > > gnucash-user mailing list > > gnucash-user@gnucash.org > > To update your subscription preferences or to unsubscribe: > > https://lists.gnucash.org/mailman/listinfo/gnucash-user > > ----- > > Please remember to CC this list on all your replies. > > You can do this by using Reply-To-List or Reply-All. > > > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
