Entering Transactions in Cash-Basis Accounting

You enter transactions the same way for a cash-basis company as you would for an accrual-basis one. You should be aware of a few differences, however, in the way that Sage 50 Accounting handles the transactions.

Cash-basis accounting affects the following transaction windows:

Purchases, Orders, and Quotes.
Sales, Orders, and Quotes.

You record most transactions the same way that you would in accrual-basis accounting, but the program handles the entries differently.

If you record an entry and then find you made a mistake, you must void the error with a manual entry and enter the transaction correctly (you cannot make automatic adjustments in cash-basis accounting).

To record a purchase using cash-basis accounting, use the same procedure as in accrual-basis accounting. When you finish entering an invoice, click Record instead of Process.

You record an entry the same way you would in accrual-basis accounting. However, the program handles the entry differently.

When you record a purchase in cash-basis accounting, the program:

Updates the year-to-date purchases and balance owing for the vendor in the vendor record.
Updates the quantity on hand and total value in the inventory record, if you purchased an inventory item.
Saves a record of the amounts and accounts affected; however, it does not update the accounts until you record a payment against the invoice in the Payments window.

If you record a purchase, and then find you made a mistake, you record a manual entry to void it. You cannot make automatic adjustments in cash-basis accounting.

To record a sale using cash-basis accounting, use the same procedure as in accrual-basis accounting. When you finish entering an invoice, choose Record instead of Process.

When you record a sale in cash-basis accounting, the program:

Updates the year-to-date sales and balance owing in the customer record.
Updates quantity on hand and total value in the inventory record, if you sold an inventory item.
Saves a record of the amounts and accounts affected; however, it does not update the accounts until you record a payment against the invoice in the Receipts window.

If you record a sale, then find you made a mistake, you must void the error manually and then enter the correct transaction. (You cannot make automatic adjustments in cash-basis accounting.)

What do you want to do?

Learn about special procedures for sales with cash-basis accounting

Before you can record deposits or prepayments, you must set up two accounts in which to store the amounts, one called Accounts Payable (for deposits from customers) and the other Accounts Receivable (for prepayments to vendors). Once you have set up these accounts, the procedure for entering vendor prepayments and customer deposits is the same as for accrual-based accounting.

What do you want to do?

Set up the necessary accounts to enter deposits and prepayments