Wave offers both accrual and cash basis accounting options for reporting. By default, all reports in Wave are set to accrual accounting.
If you're unsure whether accrual or cash basis reporting is best for your business, consult with an accountant for guidance.
Switch between accrual and cash basis accounting
Accrual accounting
Accrual accounting records all transactions, including those that are due but have not yet been paid.
This includes:
- Accounts receivable, or income owed to you
- Accounts payable, or expenses you owe
Cash basis accounting
Cash basis accounting only records income and expense transactions when funds have been received or paid.
This includes:
- Cash transactions
- Credit card transactions
- Short-term and long-term assets (e.g., employee receivables, capitalized equipment)
- Short-term and long-term liabilities (e.g., sales tax payable, loans)
Credit card transactions are considered cash expenditures for tax purposes. This means you deduct the expense when you charge the purchase, not when you pay off the card balance. The other assets and liabilities reflect activity based on cash transactions, even if there is no immediate impact on the income statement.
Switch between accrual and cash basis reporting
Cash basis reporting is available on the profit & loss statement, balance sheet, sales tax report, trial balance, cash flow, and account transactions report.
Accrual basis reporting is not available on the cash flow report.
To switch between accrual and cash basis accounting in Wave:
- On the left-side menu, click Reports.
- Open your chosen report.
- At the top of the report, under Report Type, click the dropdown arrow and select Accrual or Cash Basis.
Click the question mark icon beside Report Types for more information about the two types of accounting.
Learn more about Wave’s reporting features in Video: Wave’s Reports Tour.