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How Cash Basis Works in AccountEdge

Table of Contents

Summary: AccountEdge is an accrual-based program. Cash Basis reports are report-only conversions. They do not post journal entries or change your General Ledger. Overview Core cash-basis formula ADI formula ADE formula Linked accounts used by Cash Basis Why sales tax can appear in ADE Historical and converted balances How to read positive and negative ADI/ADE ADI/ADE are not General Ledger accounts

Summary: AccountEdge is an accrual-based program. Cash Basis reports are report-only conversions. They do not post journal entries or change your General Ledger.

Overview

AccountEdge records transactions using accrual accounting, but certain reports can be displayed on a cash basis. When you choose Cash Basis on a Profit & Loss or Balance Sheet, AccountEdge creates report-only adjustments so the report is closer to income actually received and expenses actually paid.

The two lines that often create questions are:

Line Full name What it means
ADI Adjustment for Deferred Income Cash-basis income adjustment connected to receivables, customer payments, customer deposits, and linked asset-account timing.
ADE Adjustment for Deferred Expenses Cash-basis expense adjustment connected to payables, tax/payroll liabilities, supplier payments, supplier deposits, and linked liability/equity-account timing.

Core cash-basis formula

At a high level, Cash Basis reporting is trying to answer: What income was actually received, and what expenses were actually paid during this report period?

Cash Basis Net Profit = Cash-basis income - Cash-basis cost of sales - Cash-basis expenses +/- Cash-basis other income/expense

On the Cash Basis Profit & Loss, AccountEdge may show normal income and expense lines adjusted for cash activity, plus ADI and ADE accumulators.

Total Cash Income = Cash-adjusted income lines + ADI Total Cash Expenses = Cash-adjusted cost/expense lines + ADE Note: ADE can be negative. A negative ADE reduces Total Expenses. Note: ADI can be positive. A positive ADI increases Total Income.

ADI formula

ADI is not a single General Ledger account. It is a report accumulator. Use this as the practical reconciliation formula:

ADI = cash received during the report period for prior-period or historical sales - current-period sales/income that has not been collected by the report end date +/- customer discounts, settled credits, credit refunds, and customer deposit transfers +/- net movement in linked accrued asset accounts that AccountEdge backs out - non-income portions when applicable, such as sales tax, tips, clearing amounts, or other non-P&L portions

In plain English: ADI explains the difference between income recorded because an invoice exists and income that should appear because customer cash was actually received.

Example Accrual report Cash report effect
Invoice dated April 15, unpaid at April 30 Income is included. Cash Basis removes unpaid income.
Invoice dated December 30, paid January 2 Not current-period income if the report starts January 1. Cash Basis adds the income portion because cash was received in January.
Converted/opening A/R invoice paid after conversion May not appear in normal sales income. Payment may appear through ADI.

ADE formula

ADE is also a report accumulator, not a General Ledger account. Use this as the practical reconciliation formula:

ADE = cash paid or cleared during the report period for prior-period bills/liabilities - current-period bills, expenses, tax liabilities, or payroll liabilities not paid/cleared by the report end date +/- supplier discounts, settled debits, debit refunds, and supplier deposit transfers +/- payroll, sales tax, and other linked liability/equity-account timing +/- net movement in linked accrued liability/equity accounts that AccountEdge backs out

In plain English: ADE explains the difference between expenses recorded because a bill or liability exists and expenses that should appear because cash was actually paid or a linked liability was cleared.

Example Accrual report Cash report effect
Bill dated April 15, unpaid at April 30 Expense is included. Cash Basis removes unpaid expense, usually reducing expenses.
Old bill paid in April No current-period accrual expense if the bill was from a prior period. Cash Basis adds the payment as current-period cash expense.
Sales tax collected but not remitted by period end Sales tax is normally a liability, not a regular expense. The linked liability timing can appear in ADE.

Linked accounts used by Cash Basis

Cash Basis reporting depends heavily on linked control accounts. AccountEdge follows the accounts selected in Linked Accounts and tax/payroll setup. It does not judge whether an account is conceptually correct for the business.

Usually feeds ADI Usually feeds ADE
Accounts Receivable / Trade Debtors Accounts Payable / Trade Creditors
Customer deposits and linked customer-side clearing accounts Sales Tax Payable and other tax liability accounts
Linked accrued asset accounts Payroll liabilities and deduction payable accounts
Deposits paid to vendors can affect cash-basis expense treatment depending on setup Supplier deposits and linked accrued liability/equity accounts
Important: A transaction type listed as “not adjusted” can still affect ADI or ADE indirectly if it changes the balance of a linked account that Cash Basis reporting backs out. For example, a journal entry that clears Sales Tax Payable can change the linked liability balance used in ADE, even though the journal entry itself is not treated like a normal Bill or Pay Bill transaction.

Why sales tax can appear in ADE

Sales tax often surprises customers because it is created by sales, not bills. A taxable sales invoice can credit Sales Tax Payable:

Taxable sale: Debit: Accounts Receivable or Bank Credit: Sales Income Credit: Sales Tax Payable Sales tax remittance: Debit: Sales Tax Payable Credit: Checking

Because Sales Tax Payable is a linked liability account, unremitted or timing-difference sales tax can appear in ADE on the Cash Basis Profit & Loss.

Historical and converted balances

Historical sales and purchases themselves may not create cash impact inside the report period, but their payments do. This matters after a conversion from another accounting system.

If open Accounts Receivable is brought in as historical or opening-balance invoices, then customer payments received after conversion can appear in ADI. If open Accounts Payable or tax/payroll liabilities are brought in, then payments or clearings after conversion can appear in ADE.

Conversion example: A customer invoice dated before the report period is paid during the report period. The cash was received now, so Cash Basis reporting may add the income portion through ADI even though the original invoice was not current-period sales income.

How to read positive and negative ADI/ADE

Line Positive amount usually means Negative amount usually means
ADI Cash income is being added, often from prior-period A/R collections. Cash income is being reduced, often from current-period unpaid invoices or A/R growth.
ADE Cash expenses are being added, often from prior-period bills/liabilities paid now. Cash expenses are being reduced, often from current-period bills/liabilities/taxes not yet paid or cleared.

ADI/ADE are not General Ledger accounts

ADI and ADE are accumulators shown on Cash Basis reports. They are not accounts you can post to, reconcile, or drill down like a normal General Ledger account. To explain them, compare Cash vs Accrual reports and review the linked account activity behind the report.

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