LA GL - Accounting Basis: Accrual or Cash (1-01)

Logos Accounting lets you operate Accounts Payable on either an Accrual or a Cash basis. The default
setting is Accrual. To change to Cash, go to Preferences > Accounts Payable (File menu).

• Accrual accounting enters an expense when you incur (accrue) the obligation. Your books reflect the true status.

• Cash accounting does not enter an expense until you pay it, keeping unpaid obligations “off the books.”
Here are some factors to consider in deciding which system you should choose.

 

Accrual Accounting

Comprehensive, showing your complete financial picture (what you’ve received, what you’ve paid, and what you’ve agreed to pay).

Automated, allowing Logos to “calendar” when to pay a bill, and providing reports that show cash requirements for bills due by selected dates.

Complex — All the “power” features of Logos AP can be a bit intimidating at first glance.

 When using Logos —

 When entering transactions, you indicate the Invoice Date. Logos alerts you if the date you enter is outside of the current period.

 Posting AP transactions debits Expense accounts and credits the AP account. GL reports show these obligations as of the Invoice Date. You choose if you want all items set to be paid in full.

 The “Detailed Aging,” “Cash Requirements,” and “Open Items” reports provide valuable help in deciding which bills to pay by selected dates.

 “Select Items for Payment” lets you choose which items to pay now, in whole or in part.

 Printing AP checks automatically debits the AP account and credits the checking account. (The “Quick Checks” feature in Transaction Entry operates as a “Cash” function, as no accounts are updated until the check prints and posts.)

 Printing PR checks updates GL Accounts and creates AP transactions for withholding amounts.

 Cash Accounting

 Focused, showing only “checkbook” activity. Unpaid bills are not reflected in your books.

 Manual — Unpaid bills are usually kept and tabulated manually, so decisions about what bills to pay tend to be made outside the system.

 Simple — People understand a cash (checkbook) system.

 When using Logos —

 The Invoice Date is not used, though Logos alerts you if you put in a date outside the current period.

 Posting AP transactions saves them, but no accounts are updated. GL reports do not reflect these obligations. (You can set AP so all posted items are ready to go straight to printing checks.)

 The same reports can be run to help determine which bills to pay. (Nudging towards Accrual accounting.)

 “Select Items for Payment” works the same.

Printing AP checks debits expense accounts and credits checking. GL Reports now reflect these items, showing the check date for transactions.

 Same. (Another nudge towards Accrual.)

 The optional Accounts Receivable module allows defining individual AR accounts as Cash or Accrual,

so that different types of anticipated revenue can be recorded in the manner desired.

 

 

 

 

 

 

 

 

 

 

 

 

 

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