Comparing Data - Cash versus Accrual

Comparing Data - Cash versus Accrual

Differences in Reporting - Cash vs Accrual
You may find that if you run a Trial balance and Profit and Loss Report comparison using an Accrual basis that Xero matches with your source data.

However, if you compare the reports on a Cash Basis you may see some discrepancies. This is due to system differences between the source software and Xero, and how certain transactions are recognised. Due to the way each accounting program captures data, in some instances, it is impossible to get one accounting package to perform like another. 

Let's look at Credit Notes as an example: 


The source file applies credit notes on any date the user chooses. The result if CASH Accounting is used, is that the applied date is the date that the CN and GST is recorded as being credited by the user.

For example, a Sales Invoice has been created in February, the Credit note issued in March and then applied in April. The result is that the allocation (and GST credit for Australia & New Zealand) is not recognised until April.


Xero works off the later of the dates of the invoice and credit note.

With the example given above, the sales invoice is created in February and a Credit note issued in March. Therefore payment (credit) is applied in March also. The result is that the applied date (and the GST credit for Australian files) is recognised in March and not April as it was in the source data.  With this example, when comparing the Cash and Accrual reports you will see a difference.

Another example is a prepayment of an invoice:


In your source file, the prepayment is recognized as Receivable/Payable at the time of payment which is a Balance Sheet account.


In Xero the prepayment is recognized as Income/Expense at the time of payment which is an Income Statement/Profit and Loss account.  This means that a Trial Balance run on a Cash basis will show a discrepancy whereas a Trial Balance ran on an Accrual basis will not.

Our conversion process:

The conversion replicates the Xero method of applying the Credit note, so the figures in the Cash versus Accrual reports can be impacted due to these timing differences.  For Australian conversions, we enter compensating transactions to match the GST balances in the source file so the figures will be the same if compared on an Accrual basis.   We cannot make cash reporting behave in Xero as the cash reporting in the source file due to the different ways each system caters for these transactions.  Please be assured that the data has been converted as per the source data, and a check using Accrual accounting will quickly confirm this. 
For Australian clients, here is more information about the differences between BAS and the balance sheet if run on a different accounting basis.
Do not make any changes to the data in Xero based on a comparison using a Cash basis or you will impact the integrity versus the source accounting software.

    • Related Articles

    • Check Your Accounting Basis

      We create a Xero organisation based on Accounting Basis in your source file. It is recommended that you check this and correct if necessary prior to uploading the source file to us for conversion. NOTE: for Australia Accounting Basis this should be ...
    • Changing Accounting Basis in Xero Post Conversion

      Changing Accounting Basis in Xero Post Conversion Table of contents Warning: We recommend that you do not use the file until it has been corrected. Unless you understand the full accounting implication of the above steps there is a very high chance ...
    • How Secure is My Data?

      Data Security At Jet Convert we consider security and confidentiality to be of utmost importance and take a number of steps to protect our client data During the upload, your data is secured and encrypted for maximum security. You can verify that ...
    • Bank Versus Asset/Liability Accounts

      In Xero if you would like to be able to reconcile an account it needs to be a bank account, you don’t have to have linked bank feeds if not required. As such it is an operational decision whether it is a bank account or an asset/liability account. It ...
    • GST System Differences

      There are a number of differences in regards to GST handling that you need to be aware of when moving from one accounting package to another. These can impact you regardless of whether you are converting over yourself or using our conversion service. ...