Many small builders rely solely on cash accounting, and limit bookkeeping updates to what is spent and received in a given month. But the unevenness of construction cash flow can leave you with a distorted picture of your true profit or loss. Accrual accounting, on the other hand, is designed to recognize revenue or sales as they are earned, regardless of when they are billed or when payment is received. It also recognizes expenses when they are incurred, which does not always coincide with the receipt of an invoice or payment of a bill. This method gives you a much more accurate financial picture by showing the amount of profit you actually earn
