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I have had a couple clients inquire about cash versus accrual accounting and how it works within AgExpert Analyst and I just want to confirm that we doing it correctly.
1) FCC Input loans - setup as a separate liability account so when inputs go through the FCC account they go into the loan account which is immediately expensed as there is a loan addition and an expense. For cash accounting, is this properly classified or should it be in accounts payable?
2) Coop Accounts - same as above, so when a report is ran for cash or accrual they are always expensed in both as they are technically "paid" but is this correct?
Is there appropriate guidance that can be followed for when items should be classified as an account payable versus creating a separate liability account? Main issue is that when a client makes a large lump sum payment at the end of the year - they expect a large expense but it only decreases the liability account as it has already been expensed when a liability account other than accounts payable is created.
Hi Kyle. For your first example, both cash and accrual reporting will show the same thing, and your example seems like the correct way to do things. In the second example, reporting would depend on how things are entered. If the purchases were recorded as a payable, the expense would not show in cash reporting until the payable was cleared with a payment. In accrual reporting, you would see that expense regardless if the account at the Co-op had been paid or not.