Accrual Accounting

rezStream Cloud uses the accrual accounting method.  When using the accrual accounting method, revenue is recognized only when a service is provided. In terms of lodging, this means when a person stays at your property, you have earned revenue for that stay.  If you've taken a deposit in advance of the reservation, technically you haven't earned that revenue because that guest has yet to stay at the property for you to provide the service in which they have purchased.   

As a result of each different type of item being accounted for as its own unique addition to the revenue stream, the taxes calculated by the system may be different than those calculated on the total.

 Here are some examples to review:

We have a candy bar that is sold for $1.00 and there is a 12.4% sales tax on that candy bar. If we sell one candy bar the total would be $1.124, which would round to $1.12. If we sold two candy bars the total would be $2.248 which would round to $2.25. This all seems simple so far, but now what happens if we sell a two candy bars to two different people? Well in that case we sell each candy bar for $1.12 for a total of $2.24. (The same would happen if you sold two different types of candy bars for $1.00 each.) This means that when we look at a report for the days taxes we will see only 24¢ collected for a 12.4% tax on $2.00, when it would appear that we should have collected 25¢.

Let's say we only charge $1.00 per night for a room and also have the same tax of 12.4%. The reservation is January 1st through January 3rd (departing on the January 4th).  On December 31st the total revenue from our reservation is $0.00 (They have yet to stay). The next day January 1st the total revenue is $1.00. On the 2nd we have a revenue of $2.00. Finally on the 3rd the whole reservation is accounted for and our total revenue is $3.00. Each day as the revenue is accounted for we have to add tax for that revenue, so each day we also add 12¢. This result s in a total collected of $3.36. A 12.4% tax on $3.00 directly is 37.2¢.