Accrual Accounting 2

Topics: Generally Accepted Accounting Principles, Ledger, General ledger Pages: 1 (319 words) Published: October 22, 2011
Accrual Accounting: Income is recorded as you invoice customers, and expenses are recorded when you receive bills from vendors, regardless of when cash is actually exchanged. This presents a truer picture of income and expenses. Most companies use this method. Cash-Basis Accounting: Income is recorded when cash (checks, money orders, or currency) is received, and expenses are recorded when paid. However, unpaid credit sales and purchases do not show on ledgers, which can present a misleading picture of income and expenses. The posting method determines how Peachtree processes transactions to journals and the general ledger.

1. Real-Time Posting: Transactions are posted to the journals and the general ledger as they are entered and saved. This method can save you time and is best for most business and network environments. Most companies use this method. Batch Posting: Transactions are saved by the program and then posted in a group. When you use batch posting, you can print registers and check the batch of transactions before posting them to the journals. You can switch posting methods at any time.

Accounting periods are units of time that divide your fiscal year for reporting purposes. In Peachtree you can set up to 13 accounting periods per fiscal year. 1. Start New Company Setup, and make sure the first Accounting Periods window is displayed. 2. Choose the accounting period structure you want your company to follow: 12 monthly accounting periods: Each accounting period's starting and ending dates match those of the 12 calendar months. You can choose to start your fiscal year in January or any other month of the year. Most companies follow this fiscal year structure. Accounting periods that do not match the calendar months: Choose this option if you want to set up a custom fiscal year structure. For example, you may want four accounting periods per year or possibly 13 four-week accounting periods per year.
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