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when to add income

We got your program profit gages and are using it my husband the driver and I the accountant are in an argument about what date we use for the entry. I tell him we use the date we get paid and he’s telling me to use the date the invoice is done. I say paid due to you record payments the day it’s paid not when it’s invoiced. Which one would we use??

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The proper way for you to add the income is when you receive it. There are two types of accounting methods, accrual and cash. Small businesses like yours and mine use cash basis accounting, so we record the income when we receive it. Larger business often use accrual accounting which records the income when it is billed out. The only problem cash basis accounting creates is the income you receive for a given week doesnt always correlate with the work you did that week. If you keep up with profit gauges the longer you do it the more accurate picture you get of what's happening in the business. Hope this helps, Silly husband, the wife's always right!!

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