Close & reporting
Accruals
Expenses and revenue recorded in the period a Canadian business actually earns or incurs them, even when the invoice, cheque or payroll remittance has not moved yet, including payroll accruals that carry through to the T4 filing due the last day of February.
Management report
Illustrative client · August 2026
CAD
| Line | Aug | Jul | |
|---|---|---|---|
| Revenue | 142,380 | 131,904 | +10,476 |
| Cost of sales | (51,260) | (48,115) | (3,145) |
| Gross profit | 91,120 | 83,789 | +7,331 |
| Payroll | (46,300) | (45,900) | (400) |
| SoftwareNoted | (6,480) | (5,490) | (990) |
| Rent | (8,000) | (8,000) | 0 |
| Other operating | (9,215) | (9,870) | +655 |
| Net income | 21,125 | 14,529 | +6,596 |
Reviewer's note
Software is up on last month after two seats were added mid-month. Revenue includes one milestone invoice that will not repeat next month.
Illustrative. An example of the document, not a client's figures.
What gets accrued each month
A recurring accrual list is reviewed and updated every month: utilities, payroll, professional fees and anything else that belongs to the period before the bill or payment lands. Accrued revenue is recorded for work delivered but not yet invoiced, and prior-month accruals are reversed once the actual invoice or payment arrives. A short note explains any new or unusual accrual added in the period.
Payroll accruals feed straight into T4 filing
Payroll accruals, including source deductions and employer amounts owing at month end, are tracked in a way that reconciles directly into the annual T4 (and T4A) information returns, which are due to the CRA by the last day of February following the calendar year. Getting the monthly payroll accrual right is what keeps that February filing from turning into a reconciliation project of its own.
Cash-basis businesses still get an accrual view
Accruals do not apply for tax reporting on a cash-basis return, but many cash-basis Canadian businesses still want an accrual view for management decisions, which we can maintain alongside the cash-basis books rather than instead of them.
Why record the expense before the bill arrives
So the month it belongs to carries the cost, rather than the month the invoice happens to show up, which can be weeks later and would otherwise distort that month's margin.
Questions
Frequently asked questions: Accruals
How do payroll accruals connect to T4 filing?
Monthly payroll accruals, including source deductions owing, are tracked so they reconcile directly into the annual T4 and T4A returns, which are due to the CRA by the last day of February following the calendar year.
Do you accrue employer-matching CPP and EI too?
Yes, both the employee withholding and the employer's matching portion are accrued together so the liability reflects the full cost.
Can accrual entries be reviewed before they post?
Yes, the recurring accrual list is reviewed each month before posting, and any new or unusual accrual is flagged with a short note.
What is reversed the following month?
The prior month's accrual is reversed once the actual invoice or payment lands, so the expense is not counted twice.
What exactly is included in accruals?
Recurring accrual list reviewed and updated each month, such as utilities, payroll and professional fees, and accrued revenue recorded for work delivered but not yet invoiced. This work runs inside QuickBooks Online or Xero, whichever your business already has in place, and it rolls into your regular monthly close rather than sitting off to the side as a separate, unreconciled process.
Why record an expense before the bill arrives?
So the month it belongs to carries the cost, rather than the month the invoice happens to show up, which can be weeks later.
Do accruals apply if I run cash-basis books?
Not for tax reporting, but many cash-basis businesses still want an accrual view for management decisions, which we can maintain alongside the cash-basis books.
How is accruals priced?
Pricing for accruals depends on your transaction volume, the software you use, and how much cleanup is needed before ongoing work starts. Current ranges are published on the pricing page, and your exact fee is confirmed in writing before anything begins.
What software works with accruals?
Accruals runs inside QuickBooks Online or Xero, whichever you already use. If you are not yet set up in either, we can configure a file in your name so you keep ownership of it once the engagement is under way.
Related services
- Close & reportingPrepaid schedulesInsurance, software subscriptions and other costs paid up front spread across the months they actually cover, instead of hitting one month's profit and loss all at once.
- Close & reportingMonth-end closeA repeatable monthly close that ties every account back to source records and hands you a finished set of financials on a predictable date each month.
Industries
Next step
Talk to the team that would run your books
A short call covers your setup, your software and what a first month would look like. You get a written scope and price after it.