any accountants please respond, I am in a position where we received a sizeable invoice and sent to accountants on 12-28-21 that we invoiced and received payment on Dec21. The accountants post dated the check into Jan3 22 even though it was acknowledged on the same 12-29-22, the check was post dated to match payments terms for the supplier. This is cost of goods that should have been shown on year 21 and now since it was not shown really have me jacked up for this year. Can I have them do an ammended tax return based on this information?

For the record accrual vs. cash basis is very confusing to me.

Thanks there Gomer, don't you have a mudhole to be in somewhere? by the way, that fits me to a tee.

Paging jhardy…

It’s my understanding that in accrual accounting it is your right to report/file the income in the year in which the service/materials was provided

I would contact the accountants that post dated the check and have them correct.

So you sent out an invoice in December, and the customer paid you in Deccember, but the check wasn't deposited until January?

That doesn't impact cost of goods sold, since that is relieved with the customer is invoiced. The revenue is also booked at the same time. The only thing that would be off, is cash and accounts receiveable, but that wouldn't cause a tax implication.

No, we invoiced and received payment in Dec.
We Sent invoice for our supplier in Dec. But check was written in Jan even though we sent invoices dated in Dec which were received. Check was written post dated for Jan3

You have to know what basis you are reporting your taxes on cash vs. accrual. If the taxes are done on a cash basis think about it as simply the ins/outs of your bank account dollar for dollar in cash. What you need to understand is when the cash hit the bank. Was it in December or January. If you are reporting as accrual they need to fix it you report income when it is earned not when it hits the bank account.

Cash hit in December. Payment was reported in Dec although out payment was Jan

I am so lost, but also this is why I do cash basis don't have to worry about it spanning the calendar year. In fact, sometimes I wish I had more clients that paid me via check so I could wait to deposit those year end payments after the new year so it goes on next years taxes. Most of my clients pay me with ACH and they will try and clear out their invoices to get them paid before year end for the same reason, just opposite cash flow...

Something here is not making sense. It sounds like there are two transactions. How do you have cash coming in and going out for 1 invoice?

So your company received payment from a customer for something, and then your company turned around and paid a supplier for the merchandise you sold?

And which basis of accounting are you using? Most companies use accrual.

So your company received payment from a customer for something, and then your company turned around and paid a supplier for the merchandise you sold?

Yes.

And which basis of accounting are you using? Most companies use accrual.

Cash basis.

I guess that I can't even explain it properly...see Seinfeld clip above

Cash basis would mean you record the invoice that your customer paid when you receive the payment. And you enter the invoice your company paid when you cut the check. That is also when you would relieve the inventory and cost of goods sold.

Sounds like your accountants handled the transaction properly to me.

Oakachoy

PM me your telephone number and what time is best to call tomorrow. Amended return is likely possible. Easier to go over by phone.

Done, thanks!