if you use the cash basis of accounting (most common) you report what was received. if you use the accrual method you report what was billed. one you choose a method you can not change it without filing some special forms with the IRS.
Quickbooks has a function, as you probably know, to switch between methods. the method you choose also applies to expenses. so under the cash basis, you only get to deduct only what was paid during the year (except you can include expenses put on a credit card) whereas with the accrual method you also get to deduct unpaid bills for the year.
