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 Are you seeing balances for Accounts Receivable or Accounts Payable on your "cash basis" balance sheet in QuickBooks® financial software? Normally, those balances are omitted from the cash basis version of that report. However, in QuickBooks there are various situations that would cause those balances to be shown:
· An open balance on a customer invoice (vendor bill) that used items linked to another balance sheet account – such as a liability for customer deposits (asset for prepayments to vendors).
· A partially paid customer invoice that included inventory part items, causing QuickBooks to report the prorated cost of those items as receivables.
· An unpaid bill that included inventory part items. In order for inventory to be correct, QuickBooks needs to report the cost as a payable.
· Unapplied credit memos or payments; easily found via the Open Invoices report (for receivables) or the Unpaid Bills Detail (for payables).
· If your state requires you to pay sales tax on the accrual basis, the unremitted tax will show as receivables so that the sales tax liability included on the report is in accordance with state law.
Most of these situations are unavoidable realities within the business world. You should always take action on any unapplied credits or payments whenever possible. There are also temporary solutions available to accommodate some of the other issues. Contact your local Rea & Associates representative or Certified QuickBooks ProAdvisor for more information.
-By Joyce Gentry, Certified QuickBooks ProAdvisor (Lima office)
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