Money: How to Use Cash-Basis Accounting to Determine Your Net Worth in Money 2002 or Later (811517)


The information in this article applies to:

  • Microsoft Money 2002
  • Microsoft Money 2003 Standard

SUMMARY

This article describes how to use cash-basis accounting to report your net worth. Cash-basis accounting (as opposed to accrual-basis accounting) is a system of accounting where income and expenses are accounted for on a cash-received and cash-paid basis. To create a net worth report for a cash-based accounting system, create the report without including accounts-receivable information.

MORE INFORMATION

To use cash-basis accounting to report your net worth, you first must set up accounts by creating at least two asset accounts. One account if for entering the credit or cash that is accumulated by the company, and this may be any one of the Money account types: asset, bank, or cash. The other account is for tracking accounts receivable (AR). When the company issues an invoice to a client, the invoice is entered as an increase transaction in the AR account. When the client pays the invoice, another transaction is entered to transfer funds from the AR account to the bank account.

Note When you enter the payment transaction, the AR account balance must decrease, and the bank account balance must increase.

Customize the Report

To customize the Net Worth report:
  1. In Microsoft Money, click Reports Gallery on the Reports menu.
  2. In the left pane, click What I Have.
  3. In the right pane, double-click Net Worth.
  4. In the left pane, click Customize.
  5. On the Account tab, click Assets.
  6. Click to clear the Accounts Receivable Asset Account check box, click Apply, and then click OK.

Configure a Future Transaction to Handle the Payment When it Is Made

  1. In Microsoft Money, click Bills & Deposits on the Accounts & Bills menu.
  2. Click New, and then click Transfer.
  3. In the Payment Method box, click Other.
  4. In the From box, click the Account Receivable Asset Account you want to use.
  5. In the Frequency box, click Only Once.
  6. Type information for any other boxes, and then click OK.
  7. When the payment is made, click Calendar on the Accounts & Bills menu.
  8. In the calendar, double-click the date of the transaction.
  9. Click the transfer transaction, and then click Enter into Register.
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Modification Type:MajorLast Reviewed:1/27/2003
Keywords:kbhowto KB811517
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