The School Accounting System can be set up to operate on a cash basis. The cash basis of accounting recognizes an expense when the expenditure is paid, and recognizes revenue when the payment is received for the sale of goods and services.
When operating the Accounts Payable module on a cash basis, the system credits the cash account and debits the expense accounts for the invoice detail when the checks are written and updated. The basis for how to operate the Accounts Payable module is set within the System File in the Accounting Basis field.
When operating the Accounts Receivable module on a cash basis, the system credits the revenue account and debits the cash account when the payment is received (entered and posted). The basis for how to operate the Accounts Receivable module is set within the Accounts Receivable System File in the Post to General Ledger field.
Tip: Most school districts operate on a cash basis. Then at the fiscal year end, the necessary accrual adjustments are made to comply with Generally Accepted Accounting Principles (GAAP), if required to do so by the state.