Setting Cash vs Accrual Method

[Mike or Penny Novack]

R. Victor Klassen wrote:

>Yes, we also came from Quickbooks, and were using cash-based.   [In Canada there are tax benefits to using cashed based if you are farming].   Fortunately for us, we have relatively few transactions that cross the year boundary and therefore the difference is small. 
>
I am having more than a little difficulty understanding the SENSE in 
which Quickbooks is "accrual" when the essential differences between 
"cash" and "accrual" are the transactions entered and the dates 
associated with them. You still have to enter the date of the 
transaction, yes? You still decide what transactions you choose to 
enter? << I haven't used QuickBooks since 2006 >>

Example  (and I will be using  one from farming for the reason given above)

The hobby farmer down the road needs some help getting a field prepared. 
So on May 7th you go over there with your big tractor and plow up his 
field and on the 8th you come back with the harrow and then on the 9th 
you mail him a bill. On Jun 4th you receive a check from him for the 
full amount.

Accrual -- You enter a transaction crediting income "outside work" and 
debiting "receivables". with a date of May 9th. Later you enter a 
transaction debiting "cash" and crediting "receivables" with a date of 
June 4th. If you run monthly reports of income will show up in the May 
report, not the June report. When you did the work and when you sent the 
bill important; when the bill was paid less so.

Cash --- You enter a transaction debiting "cash" and crediting "outside 
work" dated June 4th. If you run monthly reports of income will show up 
in the June report, not the May report. When you did the work and mailed 
the bill unimportant; only when you got paid matters.

Michael D Novack