About Deciding to Change from Accrual to Cash-Basis Accounting

The decision to use cash-basis accounting requires careful consideration. Check with your accountant. If you want, you can switch to cash-basis or to accrual-basis accounting at any time, though you should make this decision carefully.

Some of the things you should consider include:

• Once you change to accrual-basis accounting, you cannot change your existing transactions back to cash-based transactions if you decide to change back to cash-basis accounting.
• Changing from cash-basis to accrual-basis accounting might cause some confusion when you examine entries for the period during which you switched methods.
• You will have to change some accounts when performing certain sales transactions such as entering credit memos, early-payment discounts, writing off bad debts, and recording NSF cheques.
• If you make a mistake when entering a transaction, you must manually void it (it is not possible to adjust transactions in cash-basis accounting).
• You will need to print unpaid transactions reports regularly to keep your business running smoothly.

To start using cash-basis accounting