Form 1120S Schedule L

[AccTaxMan]

I admit I am quite weak at this area. This is a Form 1120-S tax return. The business is on cash basis. Therefore, Accounts Receivables are not reported in current year's income until they are actually received in a future year. In this case, Accounts Receivables should not be shown on Schedule L, is it correct?

Thank you in advance for the help.

[Maribeth]

That's correct. Which means that you have to convert their books to the cash basis as of the end of the year. If the only accrual item that they have is a/r, then we make an adjustment to debit revenues and credit "deferred revenues", a liability account. Then the a/r balance (asset) and the deferred revenues (liability) wash themselves out. And are not reported on the balance sheet on Schedule L. I suppose you could also make the deferred revenues a "contra-a/r" acct, which would do the same thing.

[AccTaxMan]

Thank you Maribeth.

[Rapid Robert]

"you have to convert their books to the cash basis as of the end of the year."

Not if the books are kept on a cash basis. Not if using Quickbooks. With QB, whether to report on cash or accrual basis is a simple menu option on the P&L and Bal. Sheet reports

Note to AccTaxMan: remember, the Schedule L balance sheet is PER BOOKS. Book to tax adjustments (depreciation, meals/entertainment, etc) are on Schedule M1.