Accrual systems record the day to day transactions that affect the profitable performance of your enterprise.
There are five main contributing records that make up the accrual report:
- The previous years Balance Sheet and Equity Statements loaded into the system as Opening Balances
- The Asset Schedule which records assets that we have capitalised and are claiming depreciation expenses for.
- This year's trading statement which shows you your sales less cost of goods less your expenses and produces the Gross Profit Result
- This years Equity Statement which shows our previous years equity in the business plus this years equity inputs (Personal Loans, Profits) minus outputs (Drawings, Losses)
- This year's Balance Sheet which represents the ASSETS of the business minus the LIABILITIES (usually including Equity) and as the name suggests, it balances.
These are the entry level reports and are required for the calculation of taxes and to satisfy the Solvency Test of a Business in accordance with the Companies Act 1993 Section 4
When we move beyond these reports we are into Horizontal and Vertical Ratio Analysis comparing previous trading years and this year plus monitoring the ratios of the monthly figures as they progress.