Changing your accounting method is a very critical act and affects your income numbers and, consequently, your tax obligations. It is important to understand the implications of changing your accounting methods. Before moving forward, please read the article below and contact our Product Support team.

Topics included in this article

• Why is the accounting method grayed out in parameters?

• When should I change my accounting method?

• Changing Accounting Methods when upgrading from Expert to Elite

• Elite Accounting Method Changed Restrictions

• What will happen to the software if I change my accounting method?

• Reporting Posted Income

Why is the accounting method grayed out in my parameters?

Point of Rental always advises you to seek advice from your accountant prior to making any changes to your accounting method. Many factors would be affected by changing your accounting method. See our documentation on Accounting Methods for an explanation of each method type.

When should I change my accounting method?

An accounting method change must happen on the first day of the month following your End of Month on the last day of the previous month. If the last day is on a Sunday and you are closed on Sundays, you should set your EOM to Sunday and do your EOM on Sunday, not Friday or Saturday.

✅Must Do’s

1. It is imperative that you do your EOM on the actual last day of the month.
     
2. The next morning (the first day of the month), run the ChangeAccounting program.
   
   
3. Next, confirm that your parameter settings now show the desired accounting method.
     
4. Do an EOD to isolate the accounting change GL entries to a batch that will not include real business information.

❌DO NOT

1. Make this change in the middle of the month.
    
2. Once the change is made, you cannot reprint/generate GL entries prior to this change. If you attempt to generate GL entries for a date prior to your change, they will be incorrect as they will be generated based on your new accounting method.

Changing Accounting Methods when upgrading from Expert to Elite

If you're an existing customer upgrading from Expert to Elite, you will be able to keep your cash accounting designation. However, this will limit some of the functionality within Elite. You will not be able to utilize an external tax integration (Vertex or CCH), and you will not be able to utilize an API accounting integration set to Transaction or Real Time mode.

Elite Accounting Method Changed Restrictions

The Elite system supports the Cash Accounting Method when using Batch mode integrations. If you are connecting to an accounting package such as QuickBooks Online (QBO) or another provider, you can do so in Batch mode. Real-time or Transaction mode integrations are not available with the Cash Accounting Method. For customers using a tax integration service, the Closed Accrual Accounting Method is the required option.

What will happen to the software if I change my accounting method?

If you are going from CASH TO OPEN

• Accounts Receivables - You will now have A/R and G/L you did not have before.

• Suspense Fund - Will change monies in your Suspense fund to credits on account.

• Income - Your income will be posted when the contracts are OPENED vs PAID IN FULL.

• Sales Tax - This is accounted for when the contract is Opened.

If you are going from CASH TO CLOSED 

• Accounts Receivables - You will now have an A/R and G/L you did not have before.

• Suspense Fund - Will change the monies in your suspense fund, they may increase based on your payments made to open contracts or reservations.

• Income - Your income will not post until the contracts are CLOSED vs PAID IN FULL.

• Sales Tax - This is posted to the GL account when the contract is closed. Income is generated based on when a contract is billed. This is set through “Bill these contracts status(es)” in your software Parameters. Normally, this would be set to Close.

If you are going from one Accrual method to another (OPEN TO CLOSE or CLOSE TO OPEN)

• Accounts Receivables - You will still have A/R and G/L.

•  Suspense Fund - You will still have a Suspense Fund. Money will be moved out of it based on the status of the contract (OPEN vs. CLOSED).

• Income - Your income will be posted when the contracts are sent out (OPENED) or when closed (CLOSED).

• Sales Tax - This is accounted for when the contract is sent out (OPEN) or closed (CLOSED). Income is generated based on when a contract is billed. This is set through “Bill these contracts status(es)” in your software parameters. Normally, this would be set to Close.

If you are going from ACCRUAL TO CASH

• Accounts Receivables - You will no longer have receivables.

• Suspense Fund - Technically, Cash Accounting does not have a Suspense fund. However, partial payments coming over from accrual will be held until the contract is PAID IN FULL.

• Income - Your income will post when the contract is PAID IN FULL.

• Sales Tax - This is posted to the GL account when the contract is PAID IN FULL.

Reporting Posted Income

What is Posted Income or Posted Income Totals?

Income totals from contracts that are posted to the General Ledger Accounts based on your Accounting Method. This determines when the income is going to be posted to the General Ledger.

Where can I find Posted to Totals Income?

The report will show each contract that was posted to totals for the time period selected. You can also run the same report on a Contract basis. 

This can be accessed and printed through:

Expert

• Program Menu > Accounting Reports > Contract Posted to Totals Details
• Program Menu > End of Day Processing > Contracts Posted Report
   

• In the left menu, select Reports and search for "Contracts Posted"
     

Both Products, Within a contract (transaction)

• In the top-menu toolbar > Reports > Posted to Totals Report

What makes up the Contract Posted Report?

This report will print based on the accounting method you have set in Parameters. If you need this report in a different accounting method, use the options under Accounting Reports.

• Sales Tax - The amount of tax associated with a contract based on the assigned sales tax rate.
   
• Non-Sales Tax - is the amount of the contract minus the sales tax (Rental, Sales, Dmg Wvr, Asset, Finance, and Other).
    
• TTL - The subtotal amount of the (Rental, Sale, Dmg Wvr, Asset, Finance, and Other) plus the Item Percentage and Sales tax.

What happens if a posted total is missing?

If a post transaction is missing, it would be considered a Miscellaneous Entry. See our documents on miscellaneous entries to learn how to correct them.

Do Posted to Totals Affect GL Entries?

Yes, since this is income from a contract or contract, the income will be entered into the appropriate GL income accounts once the income has been posted.

How will I know when the income is going to be posted?

Income will be posted based on the Accounting Method set within the parameters. When you first go “live,” your accounting method is locked in.

What GL Entries are affected by Posted Income?

Within the GL Entries, the Income Account will be affected. Items within the Income Account would consist of the following:
 

Flow Chart of Income Posted (From Left to Right):

How does changing your Accounting Method affect your Posted Income?

Here is what happens when a posting takes place. The only real difference is with OPEN Accrual and Reservations; doesn't look like it is documented.
 

• J - Reservation contract: Accrual accounting method will "Bill these contract status(es)" in parameters set to 'Closed or 'Closed & Open"
  
  
• I -  Reservation contract: Accrual accounting method with "Bill these contract statues (es) in parameters set to 'Closed, Open & Reservations, Cash Accounting.

What actually happens:

Closed - Bill these contract status (es) (C,O,R) = RI Posts at CLOSE

Closed - Bill these contract status (es) (C,O) = RJ Posts at CLOSE

Closed - Bill these contract status (es) (C) = RJ Posts at CLOSE

Open - Bill (C,O,R) = RI Posts at RESERV

Open - Bill (C,O) = RJ Posts at OPEN

Open - Bill (C) = RJ Posts at OPEN

Cash - Bill (C,O,R) = RI Posts at PAID IN FULL

Cash - Bill (C,O) = RI Posts at PAID IN FULL

Cash - Bill (C) = RI Posts at PAID IN FULL