Transaction Date

Enter invoice date or the date the cheque is cashed?

Hi all,

I have run across a purchase invoice which is dated on July 25, while the date the cheque was cashed on bank statement is on Aug 2.

I am not sure which date should I enter in the purchase invoice journal in simply accounting.

If I enter the invoice date, the bank statement for Aug will not be consistence with book, and it will give some trouble on making the monthly bank reconciliation. If I enter the date on the bank statement, the expense actually does not exist in Aug instead of July.

Does anyone know which date I should enter while avoiding the drawback I said above?

I am not familiar with Simply Accounting software any more ... but I am going to assume that it functions similar to QuickBooks with regards invoicing.

A good bookkeeping practice is to enter your purchase invoices into your Accounts Payable module using the date of the invoice ... in this example July 25. This will create the entry:

Debit "The Appropriate" Expense Account

Credit Accounts Payable

When you write the cheque to pay the invoice, you would do this through the Account Payable module not your Banking module. Paying the bill would then create this bookkeeping entry:

Debit Accounts Payable
Credit Cash in Bank

Assuming the cheque was written in July but did not get cashed until Aug 2 as you say, then your July bank reconciliation will show the cheque as outstanding. When you prepare your August bank reconciliation, the cheque will have cleared.

Hope this explanation helps you understand how your bank reconciliation works.

Cash or Accrual Basis

by Melanie
(Hamilton, ON, Canada)

This is an airheaded question:

Do we do bookkeeping on the cash basis or the accrual basis? This is my reason for asking:

I am starting work on a new file that I took over. The previous bookkeeper did the file by entering it on the cash basis for the past 20 years.

I don't know if I am making a big deal out of this by asking this question but from all this, I am completely frustrated by the looks of the accounting system and how to proceed with it. It seems awkward to me.

If I am to start working on the file on the accrual basis, how do I convert it to the accrual basis after it has been done on the cash basis for 20 years.

As a bookkeeper, what steps or courses of action should I take to fix this?

Hi Melanie,


I chat a bit about cash vs accrual accounting in three spots on the sites:

Cash basis of accounting vs accrual basis of accounting

Who can use cash basis of accounting in Canada?

Cash basis not a good reflector of the health of a business (see comments in this forum post)

A good place to start doing the books on an accrual basis is to:

1. Set up our opening balances at the last day of the previous year.

2. Ask your client to draw up a list for you of their existing accounts receivable and accounts payable. Use this list to "adjust" your opening balances on the first day of the fiscal year as these would not have been recorded/captured under the cash basis of accounting.





Publisher's Note: This post was initially published under "Unanswered Questions" so that other bookkeepers could weigh in on how they handled this.


P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.