Hi there, @Navneet Singhal. Let me share with you some additional information about your sales or income report in QuickBooks Online (QBO).

The Sales report in QBO contains the sales details associated with all your customers. While the Profit and Loss report displays your business's income and expenses. You can filter your reports to customize and get the information you need.

On the other hand, selecting a liability account from your inventory items Income account drop-down is not available. The system only allows you to pick an Income account type from there. I'm adding these screenshots as your visual reference.

If you used non-inventory items, the transactions still shows up on your sales report even if you're using a liability account under Income account.

With regards to your report's basis, accrual reporting is an accounting method that tracks the time when you enter a transaction and the time when you pay or receive cash may be two separate events. It shows your income and expenses are paid or not.

While cash basis is a bookkeeping method in which you regard income or expenses as occurring at the time you receive a payment or pay a bill. The cash basis report only shows income if you have received cash and expenses if you have paid cash.

You can check out this link to learn more about these methods: Cash vs. accrual accounting: What’s best for your small business?.

If you have any other questions about your reports, let me know by adding a comment below. I'm more than happy to help. Keep safe!