Cash-based versus accrual-based accounting

Although the rest of iMIS uses accrual-based accounting methods, cash-based accounting is the preferred setup for recording customer billing. Cash-based accounting recognizes income only when payment is received, not when a customer is billed. Cash-based accounting is the preferred method for billing because billing payments are always an optional payment for the customer. Open A/R items are created when the accrual-based accounting method is used. If a customer does not make a payment by the end of the defined grace period, the A/R items must be reversed with adjusting transactions.