Cash basis versus accrual basis reporting

Using MYOB AccountEdge you can produce Balance Sheet and Profit & Loss reports based upon either the accrual basis accounting or cash basis accounting methods. (MYOB AccountEdge uses the accrual basis method of accounting; it is an accrual-based system.)

In addition to Balance Sheet and Profit & Loss reports, other cash basis reports listed in the Index to Reports window are differentiated from accrual basis reports by the word [Cash] listed after the report name.

To display Balance Sheet and Profit & Loss reports using the cash basis or accrual basis accounting method: In the Index to Reports, highlight the name of the report you want to display. Click the Customize button to display the Report Customization window. In the Report Basis field, select Accrual or Cash; click Display to display your report.

If your business expenses rarely carry over to the next accounting period or if you routinely receive payment for your services at the time of the service, cash basis Balance Sheet and Profit & Loss reports may be the best method for your business. However, accrual basis reporting may offer a clearer picture of your business finances beyond the current accounting period.

Ask your accountant if you're unsure of the accounting method used for your business or to find out which method of reporting is best for your company.

Note: Even though MYOB AccountEdge is an accrual-based system, you can choose to use MYOB AccountEdge to track transactions using the cash-based method. If you do, the information in an accrual-based report and a cash based report will be virtually the same. (If there is a difference, it may only be due to the difference in rounding of the amounts in the two reports.) If you use MYOB AccountEdge in this way, we suggest that you continue to display the balance sheet and profit and loss reports using the "accrual" reporting basis so that you are able to drill down to the transactions that make up the amounts on the reports; the cash basis reports don't have drill down capability.

****Tech. Comm. will need to explain to the user when an accrual basis report should be used versus a cash basis report.

MYOB assumes the user maintains an accrual-based system; however, it does not prevent the user from maintaining a cash based system. The cash basis financial reports assume the user is running an accrual- based system and is alternately running a cash basis report.

If the user is using MYOB in a cash-based environment, then the user should continue to run the balance sheet and profit and loss reports using the "accrual" reporting method if they want to be able to drill down to the transactions that make up the amounts on the reports since the cash basis reports will not have drill down capability.

If the user is using MYOB in a cash-based environment, the difference between the "accrual" and "cash" reporting methods will likely be due to rounding.

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