This is a reporting issue not a chart of accounts issue. We run our businesses on accrual methods with invoices and payables, but for tax reporting we are required to report on cash basis because we elected cash basis reporting with our first tax report filing when we started our business. Having to monkey around with G/L entries to convert to cash, then back to accrual at the end/beginning of a period is not very user friendly and is error prone.
The rules should be pretty simple for cash reporting.
1. Ignore receivables and payables for balance sheet reports.
2. Only count expenses for payables that have been paid.
3. Only count income from invoices that have payment received.
This is a reporting issue not a chart of accounts issue. We run our businesses on accrual methods with invoices and payables, but for tax reporting we are required to report on cash basis because we elected cash basis reporting with our first tax report filing when we started our business. Having to monkey around with G/L entries to convert to cash, then back to accrual at the end/beginning of a period is not very user friendly and is error prone.
The rules should be pretty simple for cash reporting.
1. Ignore receivables and payables for balance sheet reports.
2. Only count expenses for payables that have been paid.
3. Only count income from invoices that have payment received.
This only needs to be an option for reporting.