Payments received in 2006 for invoices in 2005 on cash basis


A

AZNETPLUS

I am on cash basis and I am now receiving payments for some past due invoices
in 2005. How is this going to affect my books when I close 2005? Are the
past due payments that I receive in 2006 actually going to be applied as a
payment received in 2005 (the due date on the invoice)?
 
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T

TripleSticks

The short answer is No. I wish I had asked this question, before I closed
out 2005. I'm going to make a more general post to this news group, but
here's what I've determined after what actually happened to me and some
experimenting on a test dummy company I setup to see how MS SBA 2006 actually
worked.

1) MS SBA 2006 does NOT really give you an option to do cash basis vs.
accrual basis accounting. What it does do is give you some lame report
options which "simulate" what it would look like on a cash basis. Some of
the reports are misleading and some of them are just wrong.
2) MS SBA 2006 is an ACCRUAL BASED accounting system. When you close out
your 2005 year, all your sales and expenses invoiced in 2005 will be closed
out to Retained Earnings. It doesn't matter whether you received payment in
2005 or not. Obviously, this is not correct for those of us who check the
cash basis option on our company preferences.

I'm a Microsoft shareholder, so I'll continue to use the product, but shame
on Microsoft for giving us a feature incomplete product. Yes, maybe warning
bells should have gone off when I read "cash basis (reporting)". Hopefully,
the development guys read this post and will add the features necessary to
support customers who use cash basis accounting.

My advice to you would be to setup a simple dummy company, enter a few
transactions, and simulate your YE close. It only takes an hour or so and
you'll see what I mean. If I had done that I wouldn't have a monster
spreadsheet which reconciles my accounts in SBA 2006 with what they should
look like on a cash basis.

Sorry for the rant, but I hope it helps.
 

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