How to use Subledger Accounting to Configure Cash Basis Accounting for Payables and Receivables
Summary:
Subledger Accounting supports multiple accounting representations. Each representation is compliant with a different accounting standard or uses a different accounting currency. It does this by applying sets of accounting rules (accounting methods) to sub ledger transactions in parallel.
Cloud ERP’s seeded accounting method supports accrual basis and its variations. Cash basis is a great example of an alternative accounting method. Under a cash basis, accounting recognizes financial transactions based on actual inflows and outflows of funds. Consider the example of a payables invoice for office furniture. The expense is not accounted for until the payables department issues the payment to the supplier. The liability between the time that the furniture (and in our example, the invoice) is received and when it is paid is not recognized at all. Cash basis is therefore a cash flow-focused alternative to accrual