An accounting method is the rule for which date a transaction belongs to. Under the cash method, income is recorded when you receive it and expenses when you pay them. Under the accrual method, income is recorded when you earn it and expenses when you incur them, whether or not money has changed hands yet. An order you invoice in December and get paid for in January is December income under accrual and January income under cash.
In Ardent Seller the setting decides which date reports and dashboard widgets count a transaction on: Cash uses its completion date and Accrual uses its initiation date. The Cash Flow Summary widget is the one exception and always reports when money actually moved. New accounts start on Cash, and you can change the method in Settings → Account Preferences.
Changing the method can move figures between periods, because a transaction started in one period and completed in another then counts on a different date. IRS Publication 538 says that if you later want to change your accounting method, you must generally get IRS approval, so talk to a tax preparer before you switch.
Related terms
Schedule C
An IRS tax form (Schedule C - Profit or Loss from Business) used by sole proprietors. Ardent Seller can categorize expenses and generate reports aligned with Schedule C line items.
COGS (Cost of Goods Sold)
The total cost of materials, labor, and overhead directly tied to producing the goods you sell. Tracked automatically through purchases, recipes, and production runs.
Net Profit
What remains after all costs — direct costs of goods sold plus overhead, fees, and taxes — are subtracted from revenue. The true bottom line.
Inventory Valuation
The total monetary value of all inventory currently in stock, calculated based on purchase costs. A key report for understanding the assets held in your business.