Why does a cash-basis Balance Sheet report show a balance for the Accounts Receivable (A/R) account?

Legacy KB ID: 413

Question

Why does a cash-basis Balance Sheet report show a balance for the Accounts Receivable (A/R) account?

Answer

Generally, Accounts Receivable (A/R) or Accounts Payable (A/P) transactions would not show on cash-basis reports because the purpose of these accounts is to keep track of transactions that have not been paid.

Listed below are possible reasons an A/R account might have a balance on a cash-basis Balance Sheet. These situations cause an A/R balance to show on a cash-basis Balance Sheet:

* A/R or A/P transactions posting to other balance sheet accounts. These transactions must be counted and will therefore appear as posting to the A/R or A/P.

* Inventory items on an Invoice or Credit Memo. * By definition, all inventory transactions are accrual-based transactions because they all include transfers between balance sheet accounts, generally between A/R and the Inventory Asset account.

* Inventory items on an Invoice or Credit Memo will be shown on a cash-basis Balance Sheet as a transfer from Inventory Assets. The dollar amount will be the same as the Cost of Goods Sold. This number often bears little resemblance to anything appearing on the originating invoice.

Tip: From an Invoice or Credit Memo on which inventory items are used, press CTRL+Y to see a Transaction Journal that shows the postings. nal that shows the postings.

* Transfers between balance sheet accounts.

* On Invoices or Credit Memos, look for sales tax and any items that are associated with balance sheet accounts.

* When the distribution target account (A/R for example) on an Invoice or Credit Memo is another balance sheet account, Reckon Accounts reflect the change (increase or decrease) on the Balance Sheet report immediately, whether or not a payment or a Credit Memo has been applied to an Invoice. To keep the Balance Sheet in balance, Reckon Accounts needs to reference the source transaction (the invoice) as well, which causes the balance in Accounts Receivable to appear on a cash-basis Balance Sheet. This includes sales tax transactions on invoices and any inventory items.

* Unapplied payments in A/R. To find payments that have not been applied to an invoice, create an Open Invoice report. Payments that appear on the report have been received but not applied to an Invoice and will be reflected on the cash-basis Balance Sheet.

* A payment that is applied to an invoice dated in the future. Look at the A/R register for post-dated invoices. * Preferences that contradict each other. If you have your Report Preference set to Cash-Basis and your Sales Tax Preference is set to "As of Invoice Date", then a cash-basis Balance Sheet will show the dollar amount of a Sales Tax transfer.

* Data corruption. If none of the above possible causes apply to your data, you may have a corrupt data file and you should verify the data.


Need more help?

Ask the Reckon Community at: https://community.reckon.com/categories/reckonaccounts

Or Log a Support Ticket: https://www.reckon.com/au/support/

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