Why Your QuickBooks Accrual Accounting Reports Look Wrong (and How to Fix Them)

Jennifer runs a multi-channel skincare brand selling on Shopify, Amazon, and Faire. When her accountant switched QuickBooks to an accrual basis before tax season, her profit and loss report showed revenue $22,000 higher than her bank account. Expenses spiked by $8,000. 

Her balance sheet, bloated with $18,000 in "unbilled income" she could not trace. Nothing made sense.

The problem was not QuickBooks. It was timing. Accrual accounting reveals mistakes that cash-basis workflows hide: late bill entry, missing reversals, and delayed invoice recording. 

For multi-channel sellers managing hundreds of orders monthly, these errors compound quickly. Manual fixes work for small operations, but as you scale past 500 orders per month or add more channels, accrual errors multiply faster than you can correct them.

This guide breaks down the five most common QuickBooks accrual mistakes, shows how to spot them, and explains when automation becomes the only sustainable solution as you grow.

Why QuickBooks accrual accounting reports often look wrong

Switching to accrual accounting exposes timing gaps that cash-basis reporting masks. For multi-channel sellers juggling Shopify orders, Amazon payouts, and supplier bills, these gaps multiply fast, turning simple reconciliation into a forensic investigation.

How accrual and cash basis differ in QuickBooks

Cash-basis accounting records revenue when customers pay and expenses when you pay bills. It tracks money movement, not business activity. Accrual-basis accounting records revenue when earned (when orders ship) and expenses when incurred (when bills arrive), regardless of payment timing.

QuickBooks lets you toggle between methods instantly, but the resulting reports tell completely different financial stories.

Real example: Multi-channel seller managing Shopify, Amazon, and wholesale accounts

The $22,000 revenue gap comes from Shopify and Amazon orders that shipped but have not settled. These are unpaid invoices sitting in Accounts Receivable. The $8,000 expense difference reflects unpaid supplier bills for inventory already sold. 

The accrual basis shows true profitability because it captures all earned revenue and incurred costs, not just completed cash transactions.

Common surprises when switching to the accrual basis

Multi-channel sellers typically encounter three major discrepancies:

Unbilled income inflates revenue

Amazon orders shipped on day 28 appear in accrual revenue but settle 14 days later. Your profit and loss shows $102,000 earned, but your bank account shows $80,000 received. The $22,000 gap is real income, just not yet cash.

Unpaid bills spike expenses

You received $12,000 in inventory bills three weeks ago but have not paid them yet. Cash basis ignores these bills until payment clears. Accrual basis records them immediately, showing the accurate cost of goods sold and gross margins.

Timing mismatches distort monthly performance

If you delay bill entry by two weeks, expenses from September bunch into October reports. Your September profit looks artificially high, while October expenses spike unexpectedly. Neither month reflects reality.

Why these errors compound for multi-channel sellers

Most confusion stems from mixing cash-basis habits with accrual-basis expectations. When you manage three sales channels, two payment gateways, and dozens of suppliers, delayed bill entry creates cascading timing errors.

For example: You wait three weeks to enter vendor invoices because you are busy fulfilling orders. When you finally batch-enter 47 bills, they post to the current month, not when you actually incurred the expenses. 

Your cost of goods sold jumps 40 percent in one month, while margins look impossibly high in the previous month. Your accountant flags the discrepancy. You spend four hours tracking down original invoice dates and creating journal entries to fix timing.

Real-time order and bill syncing tools like Webgility eliminate these timing gaps by posting transactions when they occur, not when you remember to enter them.

But how do you identify which errors are affecting your specific reports? 

How to spot accrual errors in QuickBooks reports

You can quickly diagnose accrual errors by looking for specific red flags in your profit and loss and balance sheet reports. Knowing what to look for is half the battle.

Red flags in your profit and loss report:

• Revenue spikes in months where order volume did not increase
• Expenses are missing or doubled in certain periods
• Margins that swing sharply from month to month

Red flags in your balance sheet:

• Bloated Accounts Receivable (unbilled income not matched to payments)
• Inflated Accounts Payable (late bill entry or unpaid bills piling up)
• Accrued liabilities that never clear (old accruals not reversed)

How to compare cash and accrual reports in QuickBooks:

1. Open your profit and loss report
2. Use the “Customize” option to switch between cash and accrual basis
3. Compare total income and expenses for the same period

If the two versions differ by more than 10 percent, you likely have timing issues or missing entries. For example, if marketplace deposits do not match reported revenue, the discrepancy typically stems from incorrect accrual entries or fee mapping errors.

If you see multiple red flags across channels, manual fixes may only be a temporary solution. Automation tools can reduce risk as you scale.

Now that you know what to look for, let us break down the five most common mistakes and how to fix them.

5 Common QuickBooks accrual accounting mistakes (and how to fix them)

Most QuickBooks accrual errors come from five repeatable mistakes. Here is how to fix each one and prevent them as you grow.

• Forgetting to record unpaid bills and unbilled income

When you delay entering bills or invoices, expenses and revenue appear in the wrong periods. This can understate revenue and distort your margins

Mini-case:
A multi-channel seller delayed invoice entry for three weeks and missed $18,000 in revenue on their monthly report. Their gross margin looked 15 percent lower than reality.

Manual fix:
Enter bills and invoices as soon as you receive or send them. Set a daily or weekly schedule to review unpaid bills and unrecorded invoices. Use QuickBooks bank feeds to catch missed bills.

Webgility integration:
Webgility syncs orders as invoices in real time, eliminating unbilled income gaps. Users save 10–15 hours per week on manual data entry by automating invoice creation.

Suggested Read: Top 8 Ecommerce Accounting Software in 2025

• Not using journal entries for month-end accruals

Some expenses and revenues span reporting periods. If you do not record them with journal entries, your reports will understate or overstate results.

Manual fix:
At month-end, review recurring expenses that cross periods (like utilities or payroll). Create a journal entry to record the estimated expense. In QuickBooks:

• Click the plus icon and select Journal Entry
• Enter the date as the last day of the month
• Debit the expense account and credit Accrued Liabilities
• Add a memo explaining the accrual

Webgility integration:
Webgility automates recurring accruals based on rules you define, reducing manual work by 80 percent or more. Users report closing their books three times faster by automating month-end processes.

Suggested Read: The Complete Guide to the Month-End Close Process in 2025

• Failing to reverse accrual entries in the next period

If you do not reverse accrual entries, you double-count expenses. This inflates costs and makes financial statements unreliable.

Mini-case:
One retailer fell eight months behind on reversals. Their accrued liabilities account grew to over $40,000, and their profit and loss statement overstated expenses by thousands each month.

Manual fix:
At the start of each month, reverse every accrual entry from the prior month. In QuickBooks, open the original journal entry, click More, and select Reverse. QuickBooks creates a new entry dated the first day of the new month with debits and credits swapped.

Webgility integration:
Webgility schedules reversals automatically or flags them for review, preventing double-counting. Accounting firms using Webgility reduce month-end close time by up to 90 percent by automating accrual and reversal workflows.

• Mixing cash and accrual basis in reports

Switching between cash and accrual basis in reports without consistency creates confusion and makes it hard to compare results.

Manual fix:
Set your company-wide accounting method in QuickBooks settings. Go to the Gear icon, select Account and Settings, then Advanced. Choose your preferred method and save. Always check the accounting method before saving or sharing reports.

Webgility integration:
Webgility ensures consistent posting and reporting across all channels. When you configure your integrations, you specify whether to post transactions on a cash or accrual basis, and Webgility applies this setting uniformly to every order, payout, and fee.

• Overlooking recurring or automated accruals

Recurring expenses like rent, insurance, and payroll often require accruals. Missing these distorts monthly profitability and makes it hard to compare performance.

Manual fix:
Identify all recurring expenses that span multiple periods. Create a schedule and record journal entries to allocate costs each month. Use QuickBooks’ recurring transaction feature to automate where possible.

Webgility integration:
Webgility handles recurring entries and syncs them automatically. You can define rules for allocating recurring costs, and the system posts journal entries at month-end without manual intervention.

Suggested Read: Ecommerce Automation Software Explained | Webgility Blog

Manual fixes work for smaller operations, but when do they break down? Let us look at the tipping point.

When manual fixes are not enough: Recognizing the tipping point

Manual processes work for smaller operations, but as your order volume or channel complexity grows, manual accrual fixes break down. Automation becomes essential for accuracy and speed.

Volume benchmarks that signal the need for automation:

• Processing more than 500 orders per month
• Selling on three or more channels (Shopify, Amazon, retail, etc.)
• Spending 10 or more hours per month on accrual workflows

Hidden costs of manual accrual management:

• Every hour spent on data entry is an hour not spent on growth
• Manual entry introduces mistakes that can distort financials for months
• If it takes two weeks to close your books, you are making decisions on outdated data
• Without real-time data, you cannot track margins or identify trends

Case study proof:

• Channie’s Visual Handwriting saved over 60 hours per month by automating order syncing and accrual workflows
• Epic Mens saved 80 hours per week (two full-time employees) by automating order and inventory sync, increasing order volume by 42 percent

What automation handles:

• Real-time order sync: Every sale, refund, and return posts to QuickBooks as it happens
• Recurring accruals: The system tracks and posts entries on schedule, including reversals
• Fee allocation: Marketplace fees, payment gateway charges, and shipping costs are mapped automatically

Checklist for accurate QuickBooks accrual accounting

A simple checklist ensures you never miss a step, whether you manage accruals manually or with automation.

• Enter bills and invoices promptly
• Create and reverse month-end accruals on schedule
• Run both cash and accrual reports regularly to spot timing issues
• Check for duplicate or missing entries in your reports
• Review automation-readiness. If you process 500+ orders per month or spend 10+ hours per month on accruals, automation typically pays for itself within 30 days
• Evaluate tools like Webgility if you are reaching scale or want to eliminate manual entry

Still have questions? Here are the most common ones from QuickBooks users.

Final thoughts: Choosing the right path for your business

Accurate QuickBooks accrual reports drive better decisions. Manual fixes work for small teams, but automation is the only way to scale as your business grows. Evaluate your order volume, channel count, and team capacity. Choose the approach that keeps your books clean as you grow.

For businesses ready to scale, automation tools like Webgility keep every order, payout, and fee synced in real time. No more double entry or missed accruals.

Ready to eliminate manual work? Explore automation options or revisit your current process to ensure accuracy as you grow. Book a demo. 

Frequently asked questions about QuickBooks accrual accounting

Why do my cash and accrual reports show different revenue?

Cash-basis reports show revenue when paid; accrual-basis when earned. For example, $50,000 in unpaid invoices means accrual revenue will be $50,000 higher than cash-basis revenue.

How do I know if I reversed an accrual correctly?

Your balance sheet’s accrued liability account should show zero after reversal. If not, review your journal entries for errors or missing reversals.

When should I use journal entries vs. bills?

Use bills for known vendors and recurring expenses. Use journal entries for estimates or non-vendor accruals, such as utilities or payroll earned but not yet billed.

At what point should I consider automating accrual processes?

If you spend 10 or more hours per month on accruals, automation tools like Webgility deliver ROI in 30 days.

What is the fastest way to reconcile multi-channel sales in QuickBooks?

Automation tools sync orders, fees, and payouts in real time, eliminating manual entry and reconciliation.