Cash Basis Processes

Overview 

With Cash Basis Accounting, when Billings and Payables are posted (finalized), no transactions are generated. However, you can still track Billings that are issued to customers and Payables to pay from the list view and run reports again them. This article includes examples of how the process works from the point of creating and posting a record when Cash is the Accounting Method.

Note: If you selected Accrual and Cash (Multi-book Accounting) as the Accounting Method, these examples are also applicable for transactions on your Cash Ledger. Your Accrual Ledger will continue to post all transactions, as expected.

• Example 1: Billing Paid in Full
• Example 1: Payable Paid in Full
• Example 2: Billing Partial Payment
• Example 2: Payable Partial Payment

Example 1: Billing Paid in Full

• A Billing is issued on March 22, 2024, and posted in the Accounting Period of 2024-03.
• The Billing Total Amount is $3,360.00.
• All Billing Lines are taxable, and the tax rate is the same on all lines.

Billing Lines

Billing Lines	Qty	Unit Price	Sub-Total	Tax  Rate	Tax  Amount	Total	Revenue GL Account
Line 1	1	2,000.00	2,000.00	12%	240.00	2,240.00	4000-Product Revenue
Line 2	1	1,000.00	1,000.00	12%	120.00	1,120.00	4010-Services Revenue

Header Level Posting

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Line Level Posting

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Note: Remember that when Billings and Payables are posted (finalized), no transactions will be generated with Cash as the Accounting Method.

The business selected 4015-Unapplied Revenue as the GL Account for Unapplied Revenue in the Cash Basis Accounting section of the Default GL Accounting Settings screen and the business has one Bank GL Account, which is configured as 1000-Cash.

The customer paid the Billing in full, which is the total amount of $3,360.00. When the Cash Receipt is posted, the following transactions will be generated.

GL Account	Debit	Credit
1000-Cash	3,360.00
4015-Unapplied Revenue		3,360.00

Cash Receipt - Header Level Posting

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Cash Receipt - Line Level Posting

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When the Cash Receipt is applied to the Billing, the BCR (Billing Cash Receipt) will generate a debit transaction(s) on the Cash Ledger (to reverse the previous credit transaction) to the Unapplied Revenue GL Account and generate the credit transactions based upon the related Billing Line(s) items.

BCR (Billing Cash Receipt) - Header Level Posting

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BCR (Billing Cash Receipt) - Line Level Posting

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Example 1: Payable Paid in Full

• A Payable invoice was received on March 22, 2024, and posted in the Accounting Period of 2024-03.
• The Payable Total Amount is $3,360.00.
• All Payable Lines are taxable, and the tax rate is the same on all lines.
• Payable Lines

Payable  Lines

Payable Lines	Qty	Unit Cost	Sub-Total	Tax  Rate	Tax  Amount	Total	Expense GL Account
Line 1	1	2,000.00	2,000.00	12%	240.00	2,240.00	6000-Marketing Expense
Line 2	1	1,000.00	1,000.00	12%	120.00	1,120.00	6050-Travel Expense

Header Level Posting

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Line Level Posting

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The business selected 8000-Unapplied Expense as the GL Account for Unapplied Expenses in the Cash Basis Accounting section of the Default GL Accounting Settings screen and the business has one Bank GL Account, which is configured as 1000-Cash.

The full invoice amount was paid to the vendor, which is the total amount of $3,360.00. When the Cash Disbursement is posted, the following transactions will be generated.

GL Account	Debit	Credit
8000-Unapplied Expense	3,360.00
1000-Cash		3,360.00

Cash Disbursement - Header Level Posting

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Cash Disbursement - Line Level Posting

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When the Cash Disbursement is applied to the Payable, the APD (Accounts Payable Disbursement) will generate a credit transaction(s) on the Cash Ledger (to reverse the previous debit transaction) to the Unapplied Expense GL Account and generate the debit transactions based upon the related Payable Line(s) items.

Cash Disbursement - Header Level Posting

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Cash Disbursement - Line Level Posting

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Example 2: Billing Partial Payment

• Everything from the previous example is the exact same as far as the Billing Amount. However, the customer made a partial payment of $500 towards the total of $3,360.00.
• When the Billing is posted, since this is Cash Accounting, no transactions will be generated.

When the Cash Receipt is posted, the transactions will be generated similar to the Cash Receipt in the first example, with the partial payment amount going into the Unapplied Revenue GL Account.

GL Account	Debit	Credit
1000-Cash	500.00
4015-Unapplied Revenue		500.00

Cash Disbursement - Header Level Posting

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Cash Disbursement - Line Level Posting

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When the Cash Receipt is applied to the Billing, on the BCR (Billing Cash Receipt), the partial payment will be proportionally distributed across the Billing Lines and Sales Tax Liability. In this example, $500 was the partial payment amount. Therefore, proportionally distributing this amount would be calculated as:

$500 (partial payment) X $2,000 (Line 1 amt) / (divided by) $3,360 (total amount) = $297.62

$500 (partial payment) X $1,000 (Line 2 amt) / (divided by) $3,360 (total amount) = $148.81

$500 (partial payment) X $360 (Tax amt) / (divided by) $3,360 (total amount) = $53.57

Header Level Posting

GL Account	Debit	Credit
4015-Unapplied Revenue	500.00
4000-Product Revenue		500 X 2,000/3,360 = 297.62
4010-Services Revenue		500 X 1,000/3,360 = 148.81
2015-Sales Tax Liability		500 X 360/3,360 = 53.57

Note: Click here to view the above image in full screen. 

Line Level Posting

GL Account	Debit	Credit
4015-Unapplied Revenue	297.62
4000-Product Revenue		500 X 2,000/3,360 = 297.62
4015-Unapplied Revenue	148.81
4010-Services Revenue		500 X 1,000/3,360 = 148.81
4015-Unapplied Revenue	53.57
2015-Sales Tax Liability		500 X 360/3,360 = 53.57

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Example 2: Payable Partial Payment

• Everything from the previous example is the exact same as far as the Payable Amount. However, you made a partial payment to the vendor of $500 towards the total of $3,360.00.
• When the Payable is posted, since this is Cash Accounting, no transactions will be generated.

When the Cash Disbursement is posted, the transactions will be generated similar to the Cash Disbursement in the first example, with the amount going into the Unapplied Expense GL Account.

GL Account	Debit	Credit
8000-Unapplied Expense	500.00
1000-Cash		500.00

Cash Disbursement - Header Level Posting

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Cash Disbursement - Line Level Posting

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When the Cash Disbursement is applied to the Payable, on the APD (Accounts Payable Disbursement), the partial payment will be proportionally distributed across the Payable Lines and Purchase Tax Expense. In this example, $500 was the partial payment amount. Therefore, proportionally distributing this amount would be calculated as:

$500 (partial payment) X $2,000 (Line 1 amt) / (divided by) $3,360 (total amount) = $297.62

$500 (partial payment) X $1,000 (Line 2 amt) / (divided by) $3,360 (total amount) = $148.81

$500 (partial payment) X $360 (Purch Tax amt) / (divided by) $3,360 (total amount) = $53.57

Header Level Posting

GL Account	Debit	Credit
6000-Marketing Expense	500 X 2,000/3,360 = 297.62
6050-Travel Expense	500 X 1,000/3,360 = 148.81
6080-Purchase Tax Expense	500 X 360/3,360 = 53.57
8000-Unapplied Expense		500.00

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Line Level Posting

GL Account	Debit	Credit
6000-Marketing Expense	500 X 2,000/3,360 = 297.62
8000-Unapplied Expense		297.62
6050-Travel Expense	500 X 1,000/3,360 = 148.81
8000-Unapplied Expense		148.81
6080-Purchase Tax Expenses	500 X 360/3,360 = 53.57
8000-Unapplied Expense		53.57

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Summer '24 Release

Release Notes and Schedule

This article was new with the Summer 24 release.