Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

Accrual Accounting Unveiled! 📊

20 Jun 2025 · 1 min

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0:41

In this segment, the presenter explains the core difference between accrual and cash‑basis accounting, emphasizing that under accrual accounting revenue is recognized on the invoice date regardless of when cash is received, while cash‑basis accounting records revenue only when payment is actually received. The speaker highlights the impact of having large amounts of open accounts receivable (AR) at year‑end under accrual accounting, noting that cash‑basis methods would simply ignore those balances. The discussion then shifts to a common QuickBooks Online problem: unapplied cash payments, which occur when payments are recorded without a matching invoice or when the payment date precedes the invoice date, creating a “cart before the horse” scenario that can distort income reporting.

Chapters

It's that moment. Accrual lies where you're recording these things and you receive— whether you receive the money or not. Yes. So you have an invoice. The invoice date is your recognition of revenue, paid or not. That's your amount. Yeah. In a cash basis, it's when the payment happens. Yeah. If you have a lot of open AR at the end of the year, it's disregarded. There's no AR. Yeah. Cash basis world, which gets you into that sticky wicket of Unapplied cash payment income. Yeah. Using QuickBooks Online, right? It's always, um, and that happens a lot when you've got payments without invoices or the payment is dated before the invoice. How can you have the cart before the horse?