We offer full service accrual accounting prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These services include the preparation and maintenance of the following:
Accounting Journal - Chronological list of accounting entries noting source documents.
General Ledger - Accounting entries separated into corresponding categories with updated balances.
Bank Reconciliation - Adjusts books for any additional bank activity and helps deter employee fraud.
Accounts Receivable Aging Report - Tracking of outstanding invoices by age (0-30 days old, 31-60 days old, 61-90 days old, and 90+ days old).
Combined balances for total assets, liabilities, equity, revenue, expenses, and income.
Trial Balance - Uses all accounting entries and the accrual accounting equation to double check that everything was correctly accounted for.
Advantages of Accrual Accounting:
1) In addition to tracking and assigning money to when it's actually spent or received, accrual accounting tracks and assigns expenses to the period in which the purchased assets are actually used and tracks and assigns revenue to the period in which each piece of revenue is actually earned. Without accrual accounting, there is no way to determine how profitable you actually are on a monthly basis or in the long run, and there is no way to tell how well you can meet your obligations on a monthly basis or in the long run. Therefore, accrual accounting is necessary for receiving fair credit to operate on and for determining what you can afford in new expenses and profit taking.
2) Without doing accrual accounting a trial balance cannot be prepared and thus accuracy of accounts cannot be ensured. Books kept with the accrual method automatically double check themselves through the preparation of a trial balance.
3) Accrual accounting makes sure everything that is supposed to be accounted for is accounted for and gives the actual economic performance picture of a company. Without books kept under the accrual method, correct ascertainment and evaluation of financial results of operations cannot be made.
4) Investors and lenders expect to see proper accrual accounting in line with GAAP. Without proper accrual accounting in line with GAAP, a company's economic picture can become very murky over time and accurate analysis of profitability, liquidity, and solvency cannot be done. Further, it may also become unclear which partner or investor put in what investment. The longer a company can show records of GAAP bookkeeping, the more confidence investors and lenders will have in the company, often enabling the company to negotiate higher share prices and more favorable lending rates.
5) Without accrual accounting owners may find it difficult to satisfy income tax authorities in the instance of an audit, especially as a company's revenue grows and the likelihood of scrutiny from the IRS increases. Further, without accrual accounting owners may find it difficult to satisfy insurance companies in the instance of inventory loss due to fire or theft.