QB Issue Resolution:

Sadly, switching between accrual and cash basis can be done at the click of a button only in the simplest cases. In most cases, it is not that easy. The question is: what does QB do when you click that button?

Just to remind everyone: “Cash Basis” has to do only with reports, nothing changes in the accounts. So, this is a really, really good thing because you can switch back and forth all day long and hurt nothing.

When you click on the Cash Basis button, QB zeroes out A/P and A/R balances. QB does this by reversing outstanding transactions in those accounts. HOWEVER, QB will reverse only those transactions with the following property:

(1) Credit to A/P and Debit to an expense account, and

(2) Credit to A/R and Debit to an income account

The problem is this: if you have an A/P transaction, for example, with a debit to any non-expense account, QB will NOT reverse that transaction.

Idelgado, that is exactly what you are experiencing. QB properly reversed out the accrual to interest expense, but it will not reverse out the accrual to the loan.

Now, I have not looked at cash basis for a long time, so there may be other quirks. In general, what I suspect is that QB will correctly handle a transaction whose one side is A/P or A/R and whose other side is any P&L account, but it will not handle an accrual transaction, both sides of which affect only B/S accounts. Maybe.

If any part of what I write is correct, this means that if cash basis financials are important to you, you may have to make them manually. With any luck, you may be able to click on the Cash Basis button so QB will do part of the job, but you will then have to finish the job manually (probably in Excel).


Resolution for Issue 'Why are the amounts on the cash basis general ledger incorrect?' available: Yes (Solved).
Source: Intuit Community forum.

Why are the amounts on the cash basis general ledger incorrect?: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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