What is Cash and accrual reporting methods?

30 September 2012
Author: Jason

The Australian Taxation department also call this Cash and non-Cash accounting methods. I’ll see if I can simply explain the difference between these 2 methods.

The cash method involves reporting on the money has you receive it, or when you pay it. So if you give a tax invoice to a customer this quarter and they do not pay it until next quarter, then you do not report on it until next quarter. This is good for small business as you are only liable for the GST you have received.

So by now you can probably guess what accrual method is, yep its when you are liable to the GST that has been invoiced. So if you invoice a customer this quarter you are liable to report and pay the ATO this quarter for that amount, even if the customer has not paid the invoice at that time.

Within Plumsale the dates that you record on your invoices or purchases are used for accrual reporting, ie each line item will be counted for the period that the date of that transaction. The dates you use for the payments are used for cash reporting, So part payments will be split between each of your line items when calculating what is to be reported on.

Next month we are releasing a new report to help businesses with their BAS requirements. This report will ask you which method you use for reporting to the ATO, make sure you choose the correct method each reporting period. This same report can be used to see who you went over the year so you will be able to reconcile any amounts that may have missed.