Cash vs. Accrual Accounting
Posted by Melanie Mota on 11:24
There are two basic accounting methods available to youth sports organizations: cash and accrual. With the Cash system registrations are entered as the payments are received and expenses are recorded as checks are written. With accrual accounting a sale is recorded when a registration happens, regardless of when payment is received and expenses are recorded as they occur. For example if a travel registration is $1000 and a payment of $500 is received. A cash club would record the $500 payment and an accrual club would record the entire $1000 registration.
Which method is best for your club? The cash method could be a little less work on the front end but is not a very common choice. The accrual method will give you a bigger picture of the fiscal health of your club and is recommended by the majority of tax professionals. The downside is the accrual method requires a bit more work figuring out available cash and accounts receivable.
Keep in mind, your Blue Sombrero Invoice and financial reports will allow you to use either accounting method.
Categories : General, Support
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