Accounting methods: accrual, cash, or both

Sage Intacct lets you select your accounting method—accrual, cash, or both. If you select both Accrual and Cash, Intacct records transactions in separate journals "behind the scenes" so that you can report on either basis. For example, you can run a balance sheet report on an accrual basis and then run the same report on a cash basis.

This topic compares your choices for accounting method, and provides an overview of the impact of selecting both Accrual and Cash.

Select an accounting method

Your Intacct administrator can select your accounting method as part of the General Ledger Setup.

Accounting methods

Accounting method	Description
Accrual	All transactions are included in reports, regardless of whether cash inflow or outflow was part of the transaction. For example, AP supplier invoices appear in accrual basis reports even when unpaid. All journals and reports are Accrual. Good choice if you’re required to report on an Accrual basis.
Cash	Transactions appear on reports only when cash impact occurs (in or out). For example, AP supplier invoices are reflected in cash basis reports only when paid. All journals and reports are Cash. Good choice if you always report on Cash basis. Cash is available only for new Intacct companies.
Accrual and cash	Gives you the flexibility to generate reports using either accounting method or reporting and can then decide on a report-by-report basis which method to use. For reporting, the company might: Set the accounting method to Accrual and cash. Select Accrual as the default for reporting. This saves time if most reports will be run on accrual basis. Override the default, selecting Cash on the filters tab when needing to report on a cash basis.

Dual-method: Accrual and cash

When you select dual-method accounting, you have the flexibility to report on either an accrual or cash basis. This flexibility impacts setup and (to some extent) usage of Intacct.

Setup

Creating the ability to report on either method involves the following steps: 

• Enabling the feature

• Providing a cut-over period

• Creating the cash-basis or accrual-basis journals

• Selecting those journals in the appropriate applications

Applications that can use this feature include the General Ledger, Accounts Payable, Accounts Receivable, Cash Management, and Expenses.

The following is a high-level overview of the setup process for new companies. If your company is already set up, and you're thinking about changing your accounting method, see Change accounting methods.

1. Enable Accrual and cash in Configure General Ledger.

   At this time, you also select:

   • Your default account method for reporting.
   • Any default Other books used for reporting.
2. Create journals that are Accrual, Cash, or both Accrual and Cash.
   • On the Journal Information page, there's a new option to select whether to Include this journal when reporting in Accrual, Cash, or both.
   • As a best practice, name your journals so that you can identify them as journals that are cash, accrual or both. An example might be "Accounts Payable (C)" for the cash-basis version. This is because, in several locations, Sage Intacct displays lists of selectable journals that contain all 3 types.

3. Select those journals in the configuration pages for the appropriate applications.

   • In the setup for Accounts Payable, Accounts Receivable, Cash Management, Time, and Expenses, you're prompted for accrual journals and cash journals.
   • In each case, the setup page indicates which type of journal it's expecting.

You can use dual-reporting only going forward: you cannot change the method for prior data. The new method is applied only to the first full period after you make the change. The change is immediate.

Best practice is to close the books as of the cut-off month and work as if you're switching to a new system as of that date.

As part of the transition, in a journal that has a reporting method that's opposite of your default reporting method, make a journal entry to correct your books. In other words, if you were accrual based during the cutoff, you need make a journal entry to eliminate the following items in a cash-based journal: 

• Payables

• Receivables

• Expenses

• Revenues

The moment you select the dual-method reporting option in the Configure General Ledger page and save, Sage Intacct unconfigures any of the following applications to which you’ve subscribed: AP, AR, EE, CM, and CE. More specifically, Intacct deselects any journals you previously selected, under the assumption that you wish to begin using new accrual journals.

Consequently, users are prevented from entering transactions into the wrong journal. These applications are in a subscribed-but-unconfigured state until you select new journals in those applications. Therefore, plan to create new journals immediately, and then select them in the required applications. After you save those application configuration settings, users can access those applications again.

Transaction entry

In most cases, entering transactions is the same, regardless of accounting method. For example, users entering an AP supplier invoice do not need to know whether the transaction is accrual, cash, or both. Intacct handles the posting to accrual and cash journals "behind the scenes."

However, entering a journal entry directly in the General Ledger requires that you select a journal that corresponds to the accounting method that will be affected.

Reporting

When you create reports, you have the option to override the accounting method that you selected as the Default for reporting in your General Ledger Setup.

In the Filters section for financial reports and other General Ledger reports, use the Reporting Book option to select either:

• Accrual
• Cash
• A consolidation book that's Accrual or Cash (for Global Consolidations companies only)

The following table describes where to find the Reporting Book option for each type of report.

Type of report	Steps
Financial reports (General Ledger > All > Core)	On the Filters tab of the financial report, select the Reporting Book to use (Accrual or Cash).
Other General Ledger reports	In the Filters section of the report, select the Reporting Book.

Need to change accounting methods?