Home – New Forums Money matters GST – Cash or Accrual

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  • #978882
    happygirl
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    Hi Everyone :-)

    I am not an accountant – but really seeking someone who can is :confused:

    I understand that businesses have the option of electing how they report their revenue (i.e. Cash or Accrual) with the larger corporations electing to go the accrual method. i.e. when invoices are issued it is recorded as revenue, rather than when they are paid. This election however is a matter of choice and not legislation.

    I am confused as to how it works with GST (Cash or Accrual). I was of the understanding that a lot of people elect Cash, however as soon as you earn of $2 million in turnover you have to elect the Accrual method.

    Where am I going wrong, as my understanding in another post (Invoices) seems to indicate you can elect either option.:confused:

    Good job – I am going to do a bookkeeping course !!

    Thanks all – this is going to stay in my mind till answered by one of you accounting guru’s.

    #1110245
    CloudAccounting
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    happygirl, post: 122751 wrote:
    Hi Everyone :-)

    I am not an accountant – but really seeking someone who can is :confused:

    I understand that businesses have the option of electing how they report their revenue (i.e. Cash or Accrual) with the larger corporations electing to go the accrual method. i.e. when invoices are issued it is recorded as revenue, rather than when they are paid. This election however is a matter of choice and not legislation.

    I am confused as to how it works with GST (Cash or Accrual). I was of the understanding that a lot of people elect Cash, however as soon as you earn of $2 million in turnover you have to elect the Accrual method.

    Where am I going wrong, as my understanding in another post (Invoices) seems to indicate you can elect either option.:confused:
    Correct for gst you must report via accruals once over that amount.

    Good job – I am going to do a bookkeeping course !!

    Thanks all – this is going to stay in my mind till answered by one of you accounting guru’s. Correct you must report by accruals once above that amount.

    #1110247
    happygirl
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    CloudAccounting, post: 122770 wrote:
    Correct you must report by accruals once above that amount.

    Thank you :-)

    Appreciate your time, and that my understanding is correct – that it is not simply a matter of choice :-)

    #1110248
    Alan Maddick
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    If you turn over under $2mil then it is a choice, generally you are better off (and it is easier) if you report GST on a cash basis but you should talk to an accountant (unless you are turning over $2mil or more in which case you must use accrual basis)

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