5301.2 Accrual, Cash & Earned Value Accounting

Muli uses accrual accounting

1. Cash-basis Accounting

   Companies record expenses in financial accounts when the cash is actually paid out, and they book revenue when they actually hold the cash (in a bank account).

2. Accrual Accounting

   A company using accrual accounting records revenue when the actual transaction is completed (such as the completion of work specified in a contract agreement between the company and its customer), not when it receives the cash. That is, the company records revenue when it earns it, even if the customer hasn't paid yet. For example, a carpentry contractor who uses accrual accounting records the revenue earned when he completes the job, even if the customer hasn't paid the final bill yet.

3. Project based Earned Value (Earned Value Project Management)

   In Muli, we have the option to go one stage further to recognise project based earnings based on an “Earned Value” basis, where the gross profit for a project is calculated by projecting contract income (at completion) less project expense (at completion), calculating % complete (recognised costs/final forecast cost) by gross profit to give earned value.