What can you do if you do have an Accounts Receivable balance on your Cash Basis Balance Sheet? First, modify the following report, to help you locate the transactions making up this balance:
From Laura Madeira’s QuickBooks 2010 Solutions Guide –
• Select Reports, Company & Financial
• Select Balance Sheet Standard
• Click the Modify Report button
• The Display tab opens. Select Cash for the report basis
• Click OK
• With your mouse pointer, double-click the Accounts Receivable amount in question
• The Transaction by Account report is created
• Click the Modify Report button. The Display dialog opens
• For the Report Date Range, remove the From date and leave the To date
• Click the Advanced button, and from the Open Balance / Aging pane, select Report Date
• Click the Filters tab
• In the Choose Filters pane, scroll down to select Paid Status
• Select the Open for Paid Status radial button
• Click OK
So, why exactly do I see an Accounts Receivable balance on a Cash Basis Balance Sheet? Any of the following can be the cause:
• A/R transactions have items posting to other Balance Sheet accounts.
• Inventory items on an invoice or credit memo (typically, inventory management should be done only in Accrual Basis reporting).
• Transfers between Balance Sheet accounts.
• Unapplied Accounts Receivable customer receipts.
• Payments applied to future-dated Accounts Receivable invoices.
• Preferences that contradict each other. (This situation can happen if you select Cash Basis on your Summary Reports, but Accrual Basis as your Sales Tax preference.)
• Data corruption (click File, Utilities, Verify Data to check for data corruption).
Look for transactions that fall into any of the categories above. Any item used on a customer invoice that is mapped to another Balance Sheet account will display on a Cash Basis Balance Sheet report.
This same process works for identifying Cash Basis Accounts Payable transactions as well.