Expenses are recognized when a vendor bill is entered into the system. Accrual - Revenue is recognized when the customer is billed.Forwardpass can produce reports based on an accrual, cash, or modified accrual basis.īecause Forwardpass produces all financial statements directly from the original transactions, it is capable of producing reports using different accounting bases as desired: This caching system means subsequent reports don't have to crunch the same data over and over. These temporary caches are automatically discarded if information is changed within the source transactions (usually by changing a transaction in the past). Though Forwardpass doesn't maintain sub-ledgers, it does cache temporary ledgers that can be reloaded automatically when needed. Forwardpass caches transactional data in order to produce reports. When the customer pays, this debit and credit is recorded:Ĭash goes up and Accounts Receivable goes down. This means Rental Income goes up and Accounts Receivable goes up. For instance if a customer is charged a $400 rental payment, the following debit and credit is recorded: Behind the scenes, these debits and credits are totaled in temporary journals in order to create financial statements. Forwardpass observes the rules of double-entry bookkeeping.Įach transaction (or journal entry) records a debit and a credit. If you need to go back (and you have the appropriate permissions), you simply set the lock date back in time. Transactions before that date cannot be changed. You also never "close" books in Forwardpass, transferring information to another ledger. This means sub ledgers cannot get out of synch with the source transactions. Now, immense amounts of data can be crunched on the fly. This sort of thing wasn't possible when computers were relatively slow. When you ask for a financial statement, Forwardpass gathers all of the relevant transactions (and journal entries) in order to produce the report. Forwardpass automatically calculates retained earnings.Īt the end of the accounting year, Forwardpass automatically converts the previous year's net income to the designated retained earnings equity account. This means that the community's assets are funded by some combination of liabilities (borrowing) or equity (shareholder contributions or the generation of equity from net income). The foundation of double entry accounting is the equation: Assets always equal Liabilities + Equity.
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