Cash vs. Accrual Accounting
Quicken Business & Personal Only
Overview
Cash and accrual accounting are two different ways to record income and expenses.
Cash accounting records income when you receive payment and expenses when you pay bills.
Accrual accounting records income when you earn it and expenses when you incur them—regardless of when money changes hands.
A simple way to think about it:
Cash accounting follows your bank account. Accrual accounting follows what you’ve earned and what you owe.
Why It Matters
Your accounting method affects how you view your business’s financial health and how reports reflect performance.
Understanding the difference helps you:
Choose the right view for tax preparation
Make informed cash flow decisions
See your true profitability for a given period
Match income and expenses to the correct timeframe
Using the wrong method can make your business look more—or less—profitable than it actually is.
Cash vs. Accrual: How to Choose
Many small businesses use cash accounting because it’s simple and closely matches actual cash on hand.
You may prefer cash accounting if you:
Get paid at the time of sale
Don’t send invoices or track unpaid bills
Focus on day-to-day cash flow
You may benefit from accrual accounting if you:
Send invoices and get paid later
Track Accounts Receivable or Accounts Payable
Want reports that reflect when work was done, not just when cash moved
Some business owners use both views—cash for cash flow awareness, accrual for understanding profitability.
Examples
Income Example
You complete a $5,000 consulting project in December but don’t receive payment until January.
Cash accounting: Income appears in January
Accrual accounting: Income appears in December (when it was earned)
Expense Example
You receive a $1,200 software bill in December but pay it in January.
Cash accounting: Expense appears in January
Accrual accounting: Expense appears in December (when it was incurred)
These timing differences can significantly change how a month or year looks in reports.
Where to Find It in Quicken Business & Personal
Settings
You can set your business accounting method to default to cash or accrual in Settings > Business. Select your business, select your accounting method Cash or Accrual, and click Save.
Reports
Most reports allow you to switch between cash and accrual views.
Navigate to Reports
Select a report
Choose Customize
Select Cash or Accrual basis
Reports default to cash basis, but toggling lets you compare views and better understand timing differences.
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