[GNC] Cash flow basis (vs accrual basis) reporting

[Michael or Penny Novack]

On 3/11/2025 6:08 PM, Todd Gould wrote:
> David (and all),
>
> Thank you for your thoughtful and insightful responses.
>
> However, from these responses, it seems that I have either not stated 
> my question/need as clearly as I should have or that I have 
> unintentionally confused the issue with my unfortunate use of 'flow' 
> in proximity to 'cash'.
>
> I will try to restate for hopefully better clarity....
>
> 1. I am both familiar with and understand the fundamental accounting 
> differences between Accrual basis and Cash basis accounting
> 2. Our business model requires Accrual based accounting (GnuCash 
> default - good!) treatment for our daily operations. Invoicing (and 
> the subsequent delay in payment) as well as Payroll Expense (and the 
> shift in time from when work is performed from actual payroll cycle) 
> are 2 very common and prominent examples of needs for this.
> 3. For tax purposes (as well as a few other reporting requirements) we 
> report on a Cash basis
> 4. I'm not interested in maintaining two separate sets of books (one 
> for Accrual and one for Cash basis)
> 5. I'm not interested in simply getting closer to a Cash basis by 
> delaying entering of whatever transaction until payment is received or 
> made.  This would be both a high likelihood of error in our case as 
> well as also fundamentally work against our genuine need for accurate 
> Accrual based books as stated in 2) above.
>
> So, what I ideally want/need is the ability to run reports (P&L and 
> Balance Sheet mostly) on both an Accrual as well as Cash basis.  I am 
> familiar with QuickBooks capability to toggle between those 2 'modes' 
> directly within a given report.  This would be ideal for simplicity, 
> but if I can run both reports directly, albeit separately, that is 
> also fine.

A) I have used QuickBooks (in the distant past) when it certainly did 
not have that capability. I am not at all sure HOW that would be 
possible (certainly not easy) and I am a (retired ) pro. Did software 
for one of the world's larger financials.

B) I was NOT describing "two sets of books" in the sense of two complete 
sets of books. I was describing organizations on cash basis but 
wanting/needing to be able to produce invoices (for member statements) 
and that might be ALL that second set of books (skeleton ) used for. In 
other words, possibly NOTHING done with these invoices except mailing 
out. NOT used when payment received (quite possibly only a fraction 
going to be paid the amount invoiced in any case.

C) You are keeping books accrual basis, yes? You are really asking "how 
can I produce SOME reports) cash basis?" How hard/easy to do the 
adjusting depends on the nature of your business. How many income and 
expense accounts need to be adjusted for P&L report (with regard to 
receivable and payable). Whether any asset or liability accounts also 
need adjusting for Balance Sheet. In other words, might be only a few 
adjustments to make, report, back out. How frequent these reports? 
(annually, for tax purposes? Monthly for report to Board? That's an 
order of magnitude difference in effort)

     The essential adjustment is everything pending in receivables and 
payables needs to be backed out for accrual books to report cash basis. 
This can be easy (essentially all receivables one income account, all 
payables one expense account, only a few exceptions) or very hard (many 
income accounts, many expense accounts affected). Once the adjustment 
dome, just report excluding receivables and payables and after report, 
back out these changes.

<< the only way I can see AUTOMATED (your "toggle") is for the system 
create a temporary second set of accrual books then one by one 
cancelling out transactions active in receivables and payables, and runs 
report on THAT (temporary) set of books. Couldn't be a change to the 
report itself as both P&L and balance sheet are using account totals, 
not individual transaction.

Michael D Novack