In Accrual accounting, revenues are considered earned in the period when the transaction takes place, rather than when the cash is collected. As such, rent revenues are reported on the income statement for the period in which occupancy occurred. Transactions that generate an increase in revenue affecting accrual based Income Statements include:

• Monthly lease charges

• Billing adjustments

• Vacancy loss

• Concessions

• Write-Offs (bad debt)

Since revenues are posted when billed, Accrual based accounting always uses an Accounts Receivable asset account to record the offset entry to revenue. The balance of this account matches the Delinquency summary for the property. This account is offset or cleared when the cash is received and posted to the cash account. Since revenues are tied to occupancy, prepaid rent receipts must be recorded as a liability to the property. These cash collections represent unearned income. eSite allows this liability to be recorded to a Prepaid Liability account or as an offset to the Accounts Receivable account. Refer to Accrual-Based System Setup for a sampling of what an accrual-based system setup may look like.

Revenues are considered earned in the period when cash is collected. This accounting method does not conform to GAAP (Generally Accepted Accounting Principles) since it incorrectly measures revenue and expense due to the fact that the related activities either come before, or lag, the cash-flow dates. Cash method accounting is common for small businesses or individual owners of multi-family investment property. Since revenues are tied to cash collections, pure cash-based accounting does not accommodate the inclusion of occupancy related data. A cash-based chart of accounts does not include:

• Prepaid liabilities (or unearned income)

• Vacancy loss

• Concessions

• Write-offs (bad debt)

While the income statement does not provide occupancy related information, eSite still tracks and maintains this information as part of its standard financial and management analysis data. Keep in mind that eSite acts as a fully functioning A/R and property management system, regardless of the financial reporting requirements of the general ledger. Refer to Cash-Based System Setup for a sampling of what a cash-based system setup may look like.

When each bill or transaction is posted, the transaction includes the current accounting period. The period that the transaction belongs to is controlled by the Month End Close and Begin of Day for the recorded periods. Only transactions not marked as transferred are included in the new transfer file. If the Transfer to GL is not performed during each period, eSite may locate transactions for more than one period. When this occurs, eSite separates the activity into one batch per period.

For Inter-Company Accounts and transfers using multiple bank books, a central entity must be specified. For Multiple Bank Books, two files must be created. This is established on the Bank Books GL Accounts Tab, which can be used to modify the entity and cash account fields.

 

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