Accounting General Settings

General:

Report Options: Report Basis

CORE maintains both cash and accrual based accounts in the background, but allows you to set the default according to your preference and policy.

• Accrual: For accrual basis, CORE records income when earned and expenses when incurred. It recognizes revenue and expenses within the period transactions occur, tracking outstanding accounts receivables and payable, respectively.
• Cash: For cash basis, CORE records income when received and expenses when paid. It recognizes revenue and expenses when cash changes hands, tracking cash movement.

Example: If you send an invoice of $500 ($300 services and $200 expenses) to a client, this amount is posted to your A/R account based on your accounting method. Your profit-loss reports will show $0 for cash basis of accounting while $500 ($300 toward services and $200 toward expenses) for accrual basis. Suppose the client makes a partial payment of $250 (50% of invoice amount). When you run a profit-loss report this time, it will show $250 ($125 toward services and $125 toward expenses) for cash basis of accounting and the same $500 ($300 toward services and $200 toward expenses) for accrual basis.

Select this option if you want to use the Trust Fund Accounting feature in CORE. This option is enabled for the legal industry by default as it is commonly used by lawyers and attorneys.

Attorneys are the fiduciary of the IOLTA bank account, which is a trust fund account used to deposit the retainer payments, settlement monies, money for case costs, future services and expenses, etc. by the clients.