In PhreeBooks, only the accrual method is supported.
This is the sort of decision to be made with your accountant. Local tax and reporting regulations will govern which Accounting Method you decide to use.
Accounting Method :
“One decision the owner must make, is whether to prepare the tax returns on the cash or accrual basis.”
Under the cash basis, income is recognized when received (checks, money orders, or currency) and expenses are recognized when paid.
Note, unpaid credit sales and purchases do not show on ledgers, which
can present a misleading picture of sales/income and expenses.
Accrual Basis: (Most companies use this method)
Under the accrual basis, income is recognized when you invoice customers and expenses are recognized when you receive bills from vendors (regardless of when they are paid).
e.g. income booked when delivery is made and Sales Invoice is generated. Expenditure booked on date of incoming goods shipment, Tax Point or date of Supplier Invoice (whichever is relevant).
This presents a more accurate picture of income and expenses.
In some jurisdictions businesses are required to use the Accrual Basis/Method if their income, turnover or inventory exceed certain levels.