ACCRUAL BASIS Accounting or HYBRID CASH-MODIFIED Basis Accounting

Use Cash, Accrual, or a Hybrid Cash-Modified method. This allows AR and AP reporting during the year while still aligning year-end financials with your tax basis, giving your business a more complete and professional view of financial performance.

The Platinum Program includes support for both Hybrid Cash-Modified Basis and Accrual Basis Accounting, depending on the client’s tax filing method and operational needs.

This feature ensures that your financial records are maintained in alignment with how your business reports income for tax purposes, while also providing meaningful financial visibility throughout the year.

Client-Selected Accounting Method (Based on Tax Filing)

The accounting method used within the Platinum Program is determined based on the client’s most recently filed tax return, and confirmed for the current year with their CPA.

• If the client files taxes on a Cash Basis, ABBL applies a Hybrid Cash-Modified Basis

• If the client files taxes on an Accrual Basis, ABBL applies Accrual Basis Accounting

As part of onboarding, ABBL requires a copy of the client’s most recent filed tax return to establish this baseline.

What Is Hybrid Cash-Modified Accounting

Hybrid Cash-Modified Accounting is a practical approach that blends cash basis simplicity with selected accrual elements to improve financial visibility.

This method typically includes:

• Cash-based income and expense recognition

• Selected accrual adjustments for better reporting accuracy

• Limited use of receivables, payables, and timing adjustments

This approach is commonly used for businesses that file taxes on a cash basis but still require more operational insight than pure cash accounting provides.

What ABBL Does (Standard Scope)

Within this feature, ABBL maintains the books using the selected accounting method and performs ongoing accounting adjustments as part of the monthly close process.

This includes:

Recurring Monthly Accounting Entries

• Standard journal entries applied consistently each month

• Adjustments required to maintain reporting accuracy

Prepaids & Amortization

• Allocation of prepaid expenses on a fixed, recurring schedule

Accrued Expenses (Standardized)

• Recording of accrued expenses when:

  • Amounts are consistent, predictable, or recurring

  • Clear documentation or pattern exists

Revenue Recognition (Standardized)

• Recognition of revenue beyond simple invoicing when:

  • Contracts are annual or fixed

  • Revenue amounts are consistent and predictable

Deferred Revenue (Limited Scope)

• Basic deferred revenue tracking when:

  • Amounts are stable and follow a consistent pattern

What Is NOT Included (Standard Scope)

Unless separately scoped, this feature does NOT include:

• Work-in-Progress (WIP) accounting

• Construction or percentage-of-completion accounting

• Advanced revenue recognition models with fluctuating monthly inputs

• Complex deferred revenue schedules with variable activity

• Unearned expense recognition with fluctuating amounts

• GAAP-compliant financial reporting requirements

• Multi-entity consolidations

Complexity Boundary (Triggers for Add-On or Change Order)

Additional services or scope adjustments may be required when accounting complexity increases beyond standard assumptions, including:

• Multi-entity structures requiring consolidated reporting

• GAAP compliance requirements

• Construction or long-term contract accounting (% of completion)

• Retainer deposits or unearned revenue with high variability

• Revenue recognition that fluctuates significantly month-to-month

• Complex expense recognition schedules without consistent patterns

Tax vs. Book Accounting (Important Clarification)

Financial statements produced during the year are considered internal management reports and may not exactly match the final tax return.

• Monthly and interim reports are considered “draft” financials

• Adjustments may be made at year-end for tax compliance

Year-End Alignment Included

As part of the Platinum Program:

• ABBL performs a year-end tax return tie-out

• Financial statements are adjusted to align with the finalized tax return

• Final books are updated once tax filings are completed and confirmed

Client Responsibilities

To support accurate accounting treatment, the client is responsible for providing:

• Contracts and agreements that define revenue terms

• Confirmation of revenue recognition treatment (when applicable)

• Inventory counts (if applicable to the business)

• Communication of any changes in accounting treatment directed by their CPA

Internal Team Standard

Internally, this feature establishes the level of accounting sophistication expected within the Platinum Program.

ABBL team members are expected to:

• Apply the correct accounting method consistently

• Maintain structured and repeatable monthly entries

• Avoid introducing complex accounting treatments without approval

• Escalate non-standard or fluctuating accounting scenarios

• Ensure all adjustments support clean month-end reporting

Client Training Explanation / Key Takeaway

Your accounting method determines how and when income and expenses are recognized, which directly impacts how you understand your business performance.

The Platinum Program ensures your books:

• Align with how your business files taxes

• Provide more meaningful insight than basic bookkeeping

• Maintain consistency throughout the year

• Are properly adjusted at year-end for accuracy

This balance allows you to operate with better visibility during the year while still remaining compliant with tax reporting requirements.

*Included in the Platinum Daily Subscription Ongoing Program

*Included in the Gold Weekly Subscription Program

*Can be added as an ADD-ON Service to the Bronze Monthly Program