## Setting Up Cash Basis Accounting

This chapter provides an overview of cash basis accounting setup and discusses how to:

- Set up cash basis document types.

- Set up AAIs for cash basis accounting.

### Understanding Cash Basis Accounting Setup

When you use cash basis accounting, the system creates cash basis entries in the AZ ledger based on the accrual entry in the AA (actual amount) ledger. To set up your system for cash basis accounting, you determine the document type that you want the system to use for cash basis entries and, if necessary, set up the document type and assign it to a UDC table. Additionally, you must specify which document types to exclude from creating cash basis entries.

When you set up your system for cash basis accounting, ensure that cash basis AAIs are set up properly. Cash basis accounting uses AAI items to track rounding differences that might occur in the JD Edwards EnterpriseOne Accounts Payable and JD Edwards EnterpriseOne Accounts Receivable systems as a result of using taxes, multiple currencies, or discounts. Cash basis accounting also uses an AAI item to provide a suspense revenue account for the cash basis entry for unapplied receipts.

### Setting Up Cash Basis Document Types

This section discusses how to:

- Set up document types for cash basis entries.

- Set up document types to exclude for cash basis entries.

- Assign cash basis document types to the AA ledger.

#### Forms Used to Set Up Cash Basis Document Types

Form Name | FormID | Navigation | Usage
Work With User Defined Codes | W0004AA | Cash Basis Accounting (G09314), Valid Document Types or Document Types to be Excluded | Verify that the document types that you want to include for cash basis entries appear in UDC table 00/DT. Verify that the document types that you want to exclude from cash basis entries appear in UDC table 00/DX.
User Defined Codes | W0004A1 | Click Add on the Work With User Defined Codes form. | Add a document type to include with cash basis entries in UDC table 00/DT and add a document type to exclude from cash basis entries in UDC table 00/DX.

#### Setting Up Document Types for Cash Basis Entries

You must decide which document types you want the system to use when it creates cash basis entries. Do not use the same document type in both the AZ and AA ledgers. Using the same document type could cause confusion when you locate a journal entry because both the AA and AZ ledger records would appear, suggesting that the record had been entered twice. Using the same document type would also increase processing time because the system would need to distinguish between the two records in the F0911 table.

If you do not set up cash basis document types, the system assigns them based on the document type of the originating entry. The system uses the first character of the document type in the AA ledger entry and the letter Z for the second character. For example, if an entry in the AA ledger has a document type of PT and you do not set up a cash basis document type, the system uses the document type PZ for the cash basis entry.

Because all JD Edwards EnterpriseOne Accounts Payable document types for payments begin with the letter P (PK, PN, and PT), all cash basis entries for the JD Edwards EnterpriseOne Accounts Payable system are assigned a document type of PZ unless you set up a different document type. You might want to set up different document types to differentiate automatic, manual, and electronic payment transactions for cash basis entries. For example, you might set up the document type PZ for automatic payments, MZ for manual payments, and TZ for electronic payments.

Each document type that you use for cash basis entries must exist in UDC table 00/DT.

#### Setting Up Document Types to Exclude for Cash Basis Entries

You must identify the document types in the AA ledger that you want the system to exclude when creating cash basis entries in the AZ ledger. The system creates an entry in the AZ ledger for every entry in the AA ledger with a document type that does not appear in UDC table 00/DX.

You should exclude voucher (PV) and invoice (RI) document types because cash basis entries for these document types should not be created until they are paid. You should also exclude document types that do not represent cash transactions, such as:

- Automatic entries (AE)

- Credit memos (PM)

- Debit memos (RM)

- Adjustments (RA)

- Recurring documents (PR and RR)

- Finance charges (RF)

- Accrued property taxes (JT)

- Depreciation entries (DP)

Ensure that any custom document types are analyzed for exclusion of cash basis entries. Do not exclude document types that represent the void for accounts payable payments (PO) or accounts receivable receipts (RO).

#### Assigning Cash Basis Document Types to the AA Ledger

Access the User Defined Codes form.

After you set up the document types that you want the system to use for cash basis entries, you must assign them to the AA ledger document type from which the system creates cash basis entries.

Description 02 | Enter the two-character code for the cash basis document type in the first two positions. You are not required to complete this field if you use a system-assigned document type, such as PZ, RZ, or JZ.

### Setting Up AAIs for Cash Basis Accounting

This section discusses how to set up:

- AAIs for unapplied receipts

- AAIs for balancing accounts

See Also

Setting Up AAIs

#### Setting Up AAIs for Unapplied Receipts

When the system creates cash basis entries for receipts, it debits the bank account from the receipt and credits the revenue accounts from the invoices that the receipt pays.

When you enter an unapplied receipt, however, you record the receipt without applying it to an invoice. Later, you match the unapplied receipt to the appropriate invoice. When the system creates a cash basis entry for an unapplied receipt, it debits the bank account and credits a suspense revenue account. Later, when you apply the receipt to the invoice, the system creates cash basis entries that debit the suspense revenue account and credit the invoice revenue accounts.

When you set up the AAI item for the suspense revenue account, you must designate a business unit.

If you enter unapplied receipts, you must set up an AAI item for the suspense revenue account. To retrieve the suspense revenue account for unapplied receipts, the system uses one of these AAI items based on the hierarchy indicated:

- CByyyy. The system first searches for CByyyy (where yyyy is the general ledger offset from the unapplied receipt). You can enter the general ledger offset when you enter the receipt or, by setting a processing option, allow the value to be supplied from the customer master record.

- CBUC. If CByyyy is not set up or if you do not use a general ledger offset, the system then searches for CBUC. The system supplies UC as the default value for the G/L Offset field when you enter unapplied receipts without an offset.

- RCyyyy. If the system cannot locate CBUC, the system next searches for RCyyyy (where yyyy is the general ledger offset entered on the receipt).

- RCUC. If RCyyyy is not set up or if you do not use a general ledger offset, the system finally searches for RCUC. The system supplies UC as the default value for the G/L Offset field in which you enter unapplied receipts without an offset. If the system cannot locate RCUC, it issues an error.

  Note. If you use the Real Estate Management system, the Unapplied Bill Code field (GLC) is the same as the G/L Offset field that is used in the standard, speed, and draft entry programs. The system searches for CByyyy (where yyyy is the unapplied bill code).

#### Setting Up AAIs for Balancing Accounts

The system uses balancing accounts when calculations for multiple pay items, discounts, and taxes create slight rounding differences. To track rounding differences, you must set up these AAI items:

- CBAP - Cash Basis A/P Balancing

- CBAR - Cash Basis A/R Balancing