ACCOUNTING METHODS

When set up Payables you choose a primary accounting method. In the payables Options window you can also choose a secoindary accounting method. The accounting method determises types of accounting ectries paybles creats. For each accounting method, cash or accural, you choose a set of books in which you will account for transaction. Set up payable to create accounting method.

CASH BASIS ACCOUNTING : You account only for payments, and do not ecord liability information for invoices. The payment accounting entries typically debit your expences or asset account and credit your cash r cash clearing account. When you creating account entries, Payables might also create for discount taken and foreign currency exchange gains or loss. Payables uses the payment dater as the accounting date for your expences and cash journal entries.

ACCURAL BASIS ACCOUNTING : You create accounting entries for invoicee and payments the invoice accounting entries generally debit your expences or asset account and credit your liability account. For prepayments, Payables creates accounting entries the debit your prepayment account and credit your liability acount.

For prepayment applicatons, payables creates accountoing entries that debit your liability account and credit your prepayment account. Accounting entries typically debit the liability account and credit the cash rcash clearing account.Payables might also creat accounting entries for discount taken and foreign currency exchange gain or loss.

COMBINED BASIS ACCOUNTING: You maintain one set of books fr cash accounting and another for accural basis of accounting. Invoice distributions are recorded in accural set of books and payment didtributions are recorded in cash and accural set of books.