On accrual basis, you generally record revenue when it’s earned and expenses when they’re incurred, even if payment happens later.
Books supports this by recording invoices as Accounts Receivable and bills as Accounts Payable. Other accruals and adjustments can be recorded using manual journal entries.
This article explains how Books records transactions, payments, and adjustments when you use accrual accounting.
To check your accounting basis, go to Settings > Books Details and find Accounting basis. Learn more in Choosing your accounting method.
Bank, card, and payment processor transactions
Books automatically records income and expenses from these transactions on the transaction date, unless they’re matched to an invoice or bill. Matched payments clear Accounts Receivable or Accounts Payable; the revenue or expense is recorded on the invoice or bill date.
Payroll transactions
Books records payroll expenses on the payroll run date, even if the money leaves your account later. For example, a payroll run on August 30 that's paid out on September 3 is recorded as an August expense.
Invoices and customer payments
By default, Books records revenue on the invoice date. Each invoice creates an Accounts Receivable record. Matching a customer’s payment to the invoice clears it from Accounts Receivable.
For example, an invoice dated August and paid in September records revenue in August. The September payment clears the amount owed.
Bills and vendor payments
Books records an expense on the bill date. Each bill creates an Accounts Payable record. Matching a payment to the bill clears it from Accounts Payable.
For example, a bill dated August and paid in September records the expense in August. The September payment clears the amount owed.
The Mercury Bill Pay integration isn’t yet available for accrual basis. In the meanwhile, you can record bills directly in Books.
Match each bill payment to its bill to avoid counting the expense twice. An unmatched payment may be categorized as a new expense while the bill remains open.
Other accruals and adjustments
You can use manual journal entries in Books to record accrued expenses, deferred revenue, prepaid expenses, and depreciation or amortization. Try using Command to create these automatically.
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