As we discussed, the Odoo platform employs the Double-entry bookkeeping system in its
Accounting module; this method is very convenient for keeping every journal entry
balanced automatically. As a result, the sum of credit will always be equal to the sum
of debits.
In accordance with the timing of recording revenues and expenses, Accounting Methods are
classified into two groups.
- Cash Basis
- Accrual Basis
So Cash Basis and Accrual Basis accounting are the two different methods for recording
tax information on accounting transactions. The recording of the transaction (revenue
and expense) time is the notable difference between these two methods. Let us have a
look at these two methods.
Accrual Basis
Accrual Basis can be considered the default Accounting method that records tax
information on revenue and expenses immediately after the generation of revenue or
expense. This method available in Odoo is handy for recording the taxes in the
accounting ledgers and tax reports at the moment it occurred.
Cash Basis Method
In the Cash Basis Method, tax on revenue or expenses is reported after receiving cash
from customers or after cash payment to suppliers. In this case, the tax on revenues is
recorded only when the payments are acquired. Also, the expenses are reported only when
the payment has been made to suppliers or employees. The Cash Basis option can be
activated from the Accounting Configuration Settings. The Cash basis accounting will
also affect the taxes that can also be created using the same method in association with
the invoice or payment.
Cash Basis Method
In the Cash Basis Method, tax on revenue or expenses is reported after receiving cash
from customers or after cash payment to suppliers. In this case, the tax on revenues is
recorded only when the payments are acquired. Also, the expenses are reported only when
the payment has been made to suppliers or employees. The Cash Basis option can be
activated from the Accounting Configuration Settings. The Cash basis accounting will
also affect the taxes that can also be created using the same method in association with
the invoice or payment.