Accrual Bookkeeping/Accounting

We offer full service accrual bookkeeping 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.

Financial Statement Preparation

For our accrual bookkeeping clients, we offer financial statement preparation as an additional a la carte service.  Clients can choose either a monthly or quarterly option.

  • Income Statement - Summarizes the revenue and expense creating activities of the company for a period of time (month, quarter, or year).

  • Statement of Cash Flows - Isolates the changes in cash from the total revenue and expense creating activities.

  • Statement of Owner's Equity/Statement of Retained Earnings - Tracks the amount of investment and income that remain held in the company less any owner's withdraws or dividends paid.

  • Balance Sheet - Summarizes the companies total assets, liabilities, and equity as of a particular date.

Financial Analysis Reports

We offer a range of financial analysis reports to choose from in order to help clients better understand the financial performance of their company and aid in decision making.

Variance Analysis Reports - The variance analysis reports that we recommend for most businesses are the Purchase Price Variance and the Sales Volume Variance.  These reports can help a company with budgeting, managing expectations, and tracking seasonal trends and general market trends.

Ratio Analysis Reports - There are a multitude of ratios that can help a company understand its efficiency compared to its own past performance as well as to industry averages.  Examples of widely relevant ratios and the insights they provide include:

  • Inventory Turnover (warehousing cost and inventory relevance/demand)

  • Days Sales Outstanding (average time to get paid)

  • Return on Equity (how well the owner's investment is generating income)

  • Interest Coverage (ability of a company to pay interest on its outstanding debt)

  • Margin of Safety (the reduction of sales that can occur before reaching the break even point)