In the start-up years, most small contractors
work out of a check book.
This is essentially a cash accounting
system, which records expenses
when checks are written to pay bills,
and records income when clients' payments
are deposited. While software like
QuickBooks Pro (QBP) keeps track of
these transactions accurately, when
used like a checkbook, the financial
reports the program generates are
almost always out of date. That's
because some of the money in the
account will be used at the end of the
month to pay for materials ordered earlier
in the month. In other words, when
QBP is set up like a checkbook, it
doesn't factor in "accounts payable"
(AP) — bills that haven't been paid