Written by Ruth Ku
August 31, 2021

True Accrual Accounting vs. Adjusted Cash Accounting: Why You Should Choose Bookkeep for Amazon Seller

August 31, 2021 / Ruth Ku


At Bookkeep, we’re geeking out over the launch of our newest integration for Amazon Seller, because of how easy, user friendly, and most of all financially accurate it is.

For business owners, accountants, and bookkeepers, automating your bookkeeping makes tracking your sales and earnings exponentially easier.

Currently, for Amazon, you have a few options for bookkeeping automation.

Plus, while other apps are primarily for commerce apps (for Amazon, eBay, Etsy, Shopify, and the like), Bookkeep supports a growing list of sales platforms that include ecommerce, payments, restaurants, and Cannabis.

The capabilities of Bookkeep are leaps and bounds above our competitors.

There are 3 important differences why Amazon Sellers should choose Bookkeep when they consider a bookkeeping automation software:

  1. Frequency & Timing (of posting journal entries)
  2. True Accrual Accounting vs. Adjusted Cash Accounting
  3. Amazon Reserve Balance


Frequency & Timing

Bookkeep posts journal entries daily, allowing bookkeepers and accountants the capability to compare and reconcile the books for any span of time, ranging from days to weeks to months to years. This is in stark contrast to other apps that do not post daily journal entries; others only post entries when Amazon processes payouts, which happen every 2 weeks for most sellers. This means they only book one entry every 2 weeks after sales have already occurred.

For the purposes of this blog post, let’s consider the Amazon payout period of July 29, 2021 -- August 12, 2021. This two-week span crosses the month-end, which, if using another software, complicates your bookkeeping. Your business needs to know the earnings and losses for the month, not the time period Amazon chooses to pay out. Since other tools only post when there’s a payout, you are unable to close out the month of July until August 12.

On the other hand, because Bookkeep posts sales journal entries every single day, if you’re ready to close out at the end of the month, there is no delay. You can have financial statements on a timely basis to track how your business is doing and make educated decisions for improvements, such as on inventory, pricing, and profit margin. You do not have to wait to do all this until August 12, like you do if using other automation software.

An Important Feature of Bookkeep (that others don’t have): Sometimes, in Bookkeep, there may be two entries for a particular day, because it’s a cut off/payout date. For example, take August 12. There is “Post” and “Pre”. Because Amazon pays out every two weeks, whatever day that period ends, Amazon cuts off that day’s sales to group the payout into that settlement period. The cutoff time might be 3pm EST, so “pre” is grouped in the settlement before the cut off, and “post” is after the cutoff. This is hugely beneficial in reconciling payouts to sales. If this is not broken out, you would not be able to reconcile what sales the payout covers precisely.

With Bookkeep, you can also run Profit & Loss reports for whatever period you wish--a week, the last 15 days, or even the entire month. With our competitors, you simply can’t do this which puts any business in a tough position that wants to do real-time financial tracking. You don’t know which days cover, or where sales and fees belong, since they are not broken down by day. The reports simply state “July 2021” or the like, making it unclear which transactions correspond to which days. This makes the entire bookkeeping process challenging and confusing.

True Accrual Accounting vs. Adjusted Cash Accounting

Bookkeep uses true accrual accounting, which means we operate in real time, as mentioned above. The transaction is booked when it occurs, rather than when the money is deposited. Meanwhile, other softwares use cash-based accounting. When cash hits the bank, everything is worked out backwards to calculate sales, fees, taxes, and then booked retroactively.

We built Bookkeep using the principles of accrual accounting, because it empowers you to book every single day. Therefore, when Amazon pays you out, you’re simply checking to confirm what Amazon deposited into your bank account is correct.

See the two images below. The first shows how the daily journal entries look in QuickBooks Online if you use Bookkeep--there is a journal entry for each day of the payout period. The second image shows the two entries another software would book for the same payout--there are only two entries.

Amazon Reserve Balance

In every journal entry on bookkeep.com, we give you the balance in the Amazon Reserve Account. No one else offers this. The Amazon Reserve Account balance equals the amount Amazon withholds at the end of the period for refunds, advertising, and other fees.

Amazon is like a bank; they hold onto the balance. The algorithm for how Amazon decides what the Account Level Reserve should be is unknown. It’s a bit of a mystery to all of us.

With Bookkeep entries, we show you the exact balance in the Amazon Reserve Account with every entry, so you know where the balance should be versus your QuickBooks account. If anything is off, you can spot it right away. See screenshot below.

Continuing with our example of the July 29, 2021 -- August 12, 2021 payout, each day is booked as a daily journal entry, not just one entry for an entire payout.

If you click on a particular day, such as August 11, you’ll see the Gross Sales, Refunds, Fees, Shipping Income, Promotional Rebates, Tax Withheld, and then, from all that, the Amazon Clearing Account is calculated. When the company gets paid, that payout amount comes out of the Amazon Clearing Account.

With Bookkeep’s daily journal entries, you always have access to a clear breakdown of Profits & Loss on the Financial Statements, detailing exactly what is happening with your business.

The capabilities of Bookkeep to automate accountings between Amazon Seller and QuickBooks Online is second to none. Sometimes, Amazon makes adjustments of which the seller is unaware. If you did not have the detailed report from bookkeep.com, you’d have to manually balance every day you book. Our competitors don’t do the reconciliation like we do.

Using Bookkeep saves you time and gives you a more comprehensive overview of how your business is performing, financially, every day.

Sign up for a FREE 14-day trial! See for yourself how Bookkeep can level up your business.

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