I'm not an accountant, but my understanding is that the difference is solely in reporting. Under cash based accounting, income over some report period is the accrued income over that period minus the change in A/R over the same period. This seems to hold for my business; does someone here know whether it's correct generally?
I have a custom report that computes my business' P&L this way. I'm happy to clean it up and publish it if someone can corroborate the correctness of the approach.
Note that correct cash basis expense reporting is harder because credit cards are not treated as A/P. I think the report could still figure it out, I just haven't done it yet.
A larger question on this topic: the income and P&L reports in gnucash have options that allow you to select the set of accounts to consider when making the report. Is there value in that, or would it be better to compute the report using all accounts of the appropriate account types?
JR
I'm not an accountant, but my understanding is that the difference is solely in reporting. Under cash based accounting, income over some report period is the accrued income over that period minus the change in A/R over the same period. This seems to hold for my business; does someone here know whether it's correct generally?
I have a custom report that computes my business' P&L this way. I'm happy to clean it up and publish it if someone can corroborate the correctness of the approach.
Note that correct cash basis expense reporting is harder because credit cards are not treated as A/P. I think the report could still figure it out, I just haven't done it yet.
A larger question on this topic: the income and P&L reports in gnucash have options that allow you to select the set of accounts to consider when making the report. Is there value in that, or would it be better to compute the report using all accounts of the appropriate account types?