Profit Margin

[aphinn89]

I am trying to figure profit margins month by month but this is what I am confused on...

If we receive a bill in January and I post it as a bill in QuickBooks but the bill is not paid until February would the said bill be figured as an expense for the January margin or the February margin?

Thanks!

 

[tdendy]

If you use accrual accounting then the expense is the date when entered as a bill (in this case, January). If you use cash accounting then the expense recognized when you receive payment (february). Most small businesses use cash accounting until a certain revenue threshhold is reached(in the millions per year). When generating quickbooks reports you have the optiion of selecting accrual or cash as a radio button.