Report to show yearly income

Actually, it was my suggestion earlier in this thread, taken straight from QB help topic "Recording an upfront deposit or retainer as a liability:"

Not necessarily true, see below.

As the memory of Allan fades, so does the memory of his shoe size and how his shoes were filled.

Correct. It has no effect on constructive receipt.

A topic which seems to be underlying this whole thread is tax treatment of a cash-based business. The default is to include advance payments for services in income for the tax year received, however the taxpayer can make an election to postpone it to the following year IF there is no chance that prepaid services will be provided at any time beyond that following year. There are also rules for prepaid sales of a cash-based business, all spelled out with examples in IRS Pub 538.

There is nothing preventing one set of books for tax purposes and another for managerial purposes.

-Mark Bole

Sniped for brevity from various responses.

"Check the date on those entries in the UF account. I suspect it was Jan 1 instead of Dec when the checks were received. Again, ignore the date of the transaction that deposited the funds into the bank account. It is the date the $ hit the UF account that counts."

Checking the accounts receivable entries, 39% were received in December 08 for 09 year. (early)

"If the assessment covers January 1, to December 31 then the invoice date should reflect a January 1st date."

I have been dating the invoices to some extent to show compliance with the company bylaws. (Must be sent 30 days prior to 1 Jan) Even though it does not specify that I cannot predate the invoice, (Invoice Date and Due dateJan1?) I am not sure what that would achieve? Expand if you can?

" I believe he wants to show the income related to those that paid for >

2009 services on a 2009 P&L even if they paid in 2008.... I understand that; that's a different question in reality, however; it's an artificial P&L that reflects the way they wish things were rather than how they are. If he wants that report imo he should code for it by some other technique than dating."

If you have a suggestion for a "code" technique, appreciate any suggestions. I have tried the year code on a few records but could not find an easy way to do a report using it.

At the quarterly report, which is given "face to face" I want to present something that is easily understood by the customer(s). Accounting logic, methods and terms make some receipents "glaze over". (sorry) i.e. a hypothetical simple example. 10 customers, invoiced $1k each all pay per schedule. IncomeK, 0K outstanding. More towards real world, 10K invoiced, 4 pay early, 5 pay per schedule and 1 has not paid. Income (year to date) = 5K, 1K outstanding.......usually followed by a short silence then a "HUH?" then a question "whats this years budget"? I reply its

9K...more silence then "does that mean we are short this year...." No... this years invoiced remainder (4K) of the money was collected as last years income.... and so on. Again to all, thanks for the comments/suggestions...did not think the thread would grow like it has :-)

The simple act of applying the receipt to an invoice posted to a customer's account with a date later than the receipt accomplishes this automatically in QB.

Recording the invoice with a date of January 1st places all the income for the upcoming year with the expenses that will be incuured for that year. It is called the matching principle.

I was skeptical that this would work but it does. I expected the December payments to show up on the Dec P&L. They showed up on the January P&L instead. Problem solved.

I would date the invoices Jan 1 with a due date of Jan 1. Mail them on Dec 1 to be in compliance with the by-laws.

An alternative would be to send them out with Dec 1 dates but edit each invoice and change the date to Jan 1 and record the payments as they are received.

I also suggest that this page might help you understand cash vs accrual accounting:

Thanx, that's good to know, and definitely more simple than the liability-based approach.

A decision will still need to be made regarding tax year treatment for a cash-based business.

-Mark Bole