To have a complete picture of your company’s financial situation, accrual-basis financial statements are necessary – unless the company does not have significant receivables or payables.
Full accrual financial statements include the following as assets:
- Accounts receivable from customers
- Payments for future periods, such as rent or insurance
- Inventory purchased but not yet sold
Accrual-basis liabilities include:
- Accounts payable to vendors
- Accruals for unpaid vacation and wages
- Unpaid interest on debt
- Payments for goods or services not yet provided (deferred revenue)
- Retirement plan contributions owed but not yet paid
Essentially, accrual-basis financial statements provide a more complete picture of financial position than the amount of cash in the bank at any given time. The professionals at Davis & Hodgdon Associates CPAs can assist with these types of financial statements. Call 802.878.1963 or visit www.dh-cpa.com.