From cash-basis books to accrual-basis statements

How a firm turns a client's cash-basis records into accrual-basis financial statements, with the adjustments to build and how to explain them.

By Achekam · 11 October 2026 · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya

Plenty of small clients run their businesses from a bank account and a spreadsheet. Money in is income, money out is an expense, and the year's result is roughly the change in the bank balance. That works for day-to-day decisions. It does not produce financial statements that a bank, a funder or an auditor can rely on.

When such a client needs proper statements, the firm's job is to turn cash records into accrual figures without starting the bookkeeping again. The method is systematic: work out what the cash records leave out at each end of the year, and adjust for it.

Why the statements need the accrual basis

Investopedia defines accrual accounting as a method that matches revenue and expenses to the period in which they are incurred rather than when cash changes hands. Cash accounting, by contrast, recognises transactions only when cash is exchanged. Investopedia also describes a hybrid, the modified cash basis, alongside the two.

For statements prepared under IFRS, the accrual basis is not optional. It has long been one of the foundations of a general purpose set, and the IFRS Foundation records that when IFRS 18 replaced IAS 1, the accrual basis of accounting was among the concepts moved to IAS 8, now titled Basis of Preparation of Financial Statements. The IFRS Foundation's IAS 8 page records that move. Either way, a client's IFRS statements must be built on accruals.

What cash records leave out

Investopedia notes that the accrual basis lets a company record revenue before receiving payment and record expenses as they are incurred. Cash books miss exactly those items, at both ends of the year:

• Customers who owe money at the year end: sales made, cash not yet received.
• Suppliers who are owed money: goods and services received, not yet paid.
• Expenses paid in advance: insurance, rent or licences covering months after year end.
• Income received in advance: deposits and prepaid fees for work not yet done.
• Stock on hand: purchases expensed when paid that are still on the shelf.
• Assets bought for cash: equipment paid for and wrongly recorded as an expense.
• Wages, interest and taxes owed but not yet paid.

Each item needs a figure at the start of the year and at the end, because the opening position affects this year's result just as much as the closing one.

Building the adjustments

The logic is the same for every line. Take revenue as a worked example in words.

Cash received from customers during the year includes money for last year's sales (the opening receivables) and excludes this year's sales still unpaid (the closing receivables). So accrual revenue is cash received, less opening receivables, plus closing receivables. If the client also takes deposits, add opening income received in advance and deduct the closing amount.

Expenses follow the mirror image: cash paid, less opening payables and accruals, plus closing payables and accruals, plus opening prepayments, less closing prepayments.

For the first year of conversion the opening balances have to be built too, because there is no accrual-basis balance sheet to start from. The firm needs:

1. a list of customers owing money at both dates, from invoices or the client's own records;
2. supplier statements or unpaid invoices at both dates;
3. a stock count, or the best available estimate, at both dates;
4. an asset list with purchase dates and costs, to separate capital items from expenses;
5. loan statements, payroll records and tax statements to capture what was owed.

Record where each figure came from. Cash-basis clients often have weaker records, so the evidence trail is what makes the result defensible.

Uploading the cash-basis figures and posting the adjustments in Achekam

Start from what the client has. Achekam lets staff upload a trial balance as an Excel workbook, a CSV file or a PDF with a text layer, and reads it into a trial balance. Where the client keeps transaction-level records instead, a firm can upload a general ledger in the layout the package exports, and Achekam adds it up into a trial balance and checks every printed account total against its own sum.

The conversion adjustments then go in as year-end adjusting entries in Achekam's Studio, backed by a schedule that says what each one does: opening receivables, closing payables, prepayments, stock, capital items. A wrong adjusting entry is reversed with a record of who did it and why, never deleted, which keeps the bridge from cash to accrual traceable.

Depreciation deserves its own note. Achekam does not calculate depreciation: it presents what is in the trial balance and flags when the charge does not agree with the movement in accumulated depreciation. A cash-basis client usually has no depreciation at all, so the firm works out the charge on the newly identified assets in its own schedule and posts it as an adjusting entry.

Explaining the difference to the client

The client will notice that profit no longer matches the change in the bank balance, and may be uneasy about it. A short reconciliation helps:

Walk the owner through it once. Most owners find the accrual figure more useful once they see that it shows what the business earned rather than what happened to land in the bank.

For the closing liabilities, finding and booking accrued expenses sets out where to search, and uploading a trial balance covers the file formats and the checks on import. If the client will keep needing statements, the most valuable step is to help them start recording invoices and bills as they happen, so next year's conversion is shorter.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.