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Cash Based Accounting Setup

Smartwebs Accounting doesn't have a setting for clients to declare "Cash" vs "Accrual" basis, because it records all system generated Journal Entries (Charges, Invoices, etc.) as Accrual basis entries first & also as Cash basis entries in addition to the Accrual entries whenever Cash is affected (Deposits, Refunds, AP Payments, Security Deposits, Forfeits, etc.).

Report Configurations

    1. Income Statement Detail Report
      1. Create a custom report
        1. Navigate to Accounting > Reports > Management Reports
        2. Open the Income Statement Details Report
        3. Select the gear icon in the upper-right corner
        4. Select the blue "Duplicate" button.
        5. In the Name section; Change the report name to "Income Statement Detail Report (Cash Basis)" or something similar
        6. Paste the same name in the Title and Description fields
        7. Select the blue "Save" button 
        8. Select the template icon in the upper-right corner
        9. Add all applicable associations In the Associations dropdown menu' or leave the default of All associations.
        10. Select the blue "Save" button
        11. Close the Configuration screen
      2. Under More Options:
        1. Change the "Balance Based On" Section to "Cash" for the Revenue and Expense fields
      3. Options:
        1. From the Option dropdown, select "save".
        2. Select "Continue" to confirm 
        3. Close the report 
        4. Your new report will have a "New" and a "Custom" tag added to it 
    2. Financial Report Packets
      1. Create Cash Basis Financial Report Packets
        1. Navigate to Accounting > Reports > Report Packets
        2. To create a new report packet see FINANCIAL REPORTING SET UP and add the newly created Income Statement Detail Report (Cash Basis)
        3. To copy from an existing report packet:
          1. Open a current Financial Report Packet
          2. Under the "Options" menu; select "Copy"
          3. Close the report packet
          4. Open the new report packet (Your new report packet will have "- Copy" at the end)
          5. In the Name section; Change the name to "Monthly Financial Packet (Cash Basis)" or something similar
          6. In the Associations Section:
            1. Select the orange pencil icon 
            2. Check the box next to each Cash Basis Accounting association
            3. Select the blue "Save" button
          7. In the Reports section:
            1. Select the orange pencil icon 
            2. Unselect the checkbox next to the existing Income Statement Detail Report and check the box next to the newly created Cash Basis one
            3. Select the blue "Save" button 
            4. Exit the screen

Beginning General Ledger Balances

Adjusting/Manual Journal Entries can be entered as EITHER Accrual OR Cash (defined by the User on creation of the JE). Since there is not enough information in a manual JE, the system doesn't know how to create the proper Cash-basis JE when the User enters the Accrual version, so the User is expected to create one Accrual JE and one separate Cash JE. 

So on "Add Journal Entry":

      • If "Is Cash" is FALSE --> Accrual JE
      • If "Is Cash" is TRUE --> Cash JE 

Also referred to as Opening/Starting Balance

Enter these General Ledger Balances after entering homeowner balances to better assist you with creating your "Clearing Journal Entry".  

 

To enter the beginning balances for your association, you will need the ending balance of each General Ledger account in your prior software. Report names can vary between accounting platforms, but it is typical to have a General Ledger or Trial Balance report available. You will create one Journal Entry using the values from your report.

    1. Journal Entry
      1. Navigate to Accounting > GL > Journal Entries
      2. Select the '+Add Journal Entry' button
      3. Date - the last day of the month in your prior software
      4. Memo - Example: Balance Forward as of 12.31.2023
      5. GL Code/GL Account - Enter the code or name for a GL with an ending balance. 
      6. Cost Center - Select the Cost Center for the specified GL if different than the designated default Cost Center
      7. Debits/Credits - Enter the balance in the appropriate side of the entry. See the Account Types section for additional information and suggestions
      8. Continue adding entries for each GL with an ending balance. 
        1. If there is a variance (in red) at the end of your entry, that amount is added to your Capital, Equity or Retained Earnings GL. This amount is your Equity/Net Income (Loss) through the "as of" date. 
        2. Crediting for Net Income or Debiting for Net (Loss)
      9. Select the 'Save" button to post
      10. Repeat this same Journal Entry, but mark the "Is Cash" box for the Cash Basis Journal Entry

Note: Once this “Beginning Balance” entry is posted, Balance Sheet/Income Statement(s) should have identical Balances in both Prior Financials & Smartwebs Financials.