The month is over. Are its costs and income in the right month?

The month that it happened, and not the month of the bill

Accrual accounting puts income and costs in the month that you earn the income or use the service. The date of the cash does not decide the month¹. The international framework for financial reports states the same idea². So the books need two kinds of month-end entry.

An accounting textbook gives the two kinds names³. An accrual records income that you earned or a cost that you used before anybody billed or paid it. Examples are interest and wages that you owe. A deferral records cash that moved first. The amount stays on the balance sheet until you earn the income or use the cost. The same textbook pairs each cost with the income that it helped to earn. Accountants call this the matching principle³.

The skill covers bonus, commission, vacation and payroll accruals, interest, utilities and services, professional fees, accrued revenue and deferred revenue. Two kinds of month-end item go to other MosoFin skills. Goods that you received without a supplier invoice go to ap-accrual-cutoff. Costs that you paid in advance, for example insurance, go to prepaid-amortization-schedule.

Seven items at Northbrook Trading for September 2026

Northbrook Trading keeps its books on the accrual basis, in US dollars, with a calendar year. The month is Tuesday 1 September to Wednesday 30 September 2026. The owner answers all nine intake questions. The skill reads the books through MosoFin and asks the owner for the facts that the books do not hold.

Why does the skill move Pinnacle's money out of income? Pinnacle paid for a year of service, and Northbrook still owes 11 months of it. A US revenue standard calls money that a customer pays before the work a liability. It measures that liability at the amount that the customer paid⁴. The skill does not re-enter the receipt, because the receipt is already in the books. It drafts one entry that moves 33,000 from income to deferred revenue. The skill does not do the full revenue-standard work. That is a separate revenue recognition task.

Some accruals reverse on 1 October and some do not. Northbrook's policy is "reverse on day one", so the electricity and audit fee accruals reverse on Thursday 1 October. The October bills then go to the expense accounts in the usual way. The bonus, its payroll tax and the interest do not reverse, although the policy is "reverse on day one". The skill treats them as cumulative: each month, it brings the balance to the amount that Northbrook owes at that date. For the interest, that amount is 801.37 for 15 days.

Last month's electricity estimate never left the books

At 31 August, Northbrook accrued 2,040 for August electricity. That estimate had to reverse on 1 September. It did not. The real August bill of 2,170 came on 9 September and went straight to the expense account. So August's electricity is in September twice: once as the old estimate and once as the bill.

The skill builds a table for each category that shows how its balance moved in the month. Accountants call it a roll-forward. For electricity: 2,040 at the start + 2,100 accrued − 0 reversed = 4,140. For an accrual that reverses each month, the end balance must equal this month's accrual, 2,100. The skill's own rule says what to do with a higher balance:

A balance above that expected figure means a reversal did not post or an item was booked twice: investigate.
references/method.md, Step 6

The skill's own file names a missed reversal as the most common cause. After the proposed correction, all five accrual balances agree with their expected figures. Their total is 180,000 + 14,400 + 801.37 + 2,100 + 9,000 = $206,301.37. The net cost that September gains from the run is 33,501.37 − 2,040 = $31,461.37.

Two small items stay out, and their total stays in view

Northbrook set a limit of $500. Accountants call this a materiality threshold. A water estimate of 180 and a courier service of 260 are each below 500. The skill does not accrue them. It lists them, with their total of 180 + 260 = $440. Small items can add up, and an auditor asks for that total. The interest of 801.37 is above 500, so the skill accrues it. If you set no limit, the skill accrues everything that it finds and says so. It never chooses a limit for you.

Then the owner says: "Just post these in QuickBooks." The skill declines once, in plain words, and gives the owner the drafts. It cannot change data in a connected system. Every entry on its output carries the mark of a proposal.

Nine questions, in one message

The skill asks these first, in one short batch. It asks only for what it cannot already see. The skill recommends questions H and I and requires the others.

1. Use MosoFin for this run, or upload the data yourself?
   MosoFin is the connection to your books and the other platforms that you link. With it, the skill reads from there. Without it, you upload the files, and the checks are the same. The skill asks only if your account has the MosoFin tools. If not, it says once that the run is manual.
2. Which company? For a group, which companies?
   The skill runs each company on its own, and every accrual carries the company's name. It never chooses a company for you. On the MosoFin path, it asks for the company by name.
3. Which period, with the exact first and last dates?
   The dates set every read, the cutoff and the date of each reversal. The skill never chooses a period for you.
4. Which categories are in scope: pay, interest, utilities and services, revenue, deferred revenue, professional fees, tax?
   The answer decides what the skill looks for. It gives you the categories as a checklist.
5. The facts behind each category: bonus pool, commission plan, pay rates, payroll register, pay calendar, loan rate, day count, contract terms, time sheets, engagement letters.
   Most amounts depend on these facts, and your books do not hold them. The skill asks only for what the books cannot show, and it tells you which is which. A missing fact stays on the output as a named gap.
6. Do accruals reverse automatically on the first day of the next month? Or does the next bill go straight against the accrual?
   Both methods are correct. The answer changes the reversing entries, and the output states your policy.
7. Do you keep the books on the accrual basis or the cash basis?
   Books on the cash basis can correctly hold no accruals at all. The skill never chooses the basis for you. On the cash basis, it says so and does not report "no accruals found". It asks if you want to change to the accrual basis.
8. What materiality threshold applies?
   The skill can skip items below the limit, but it still totals them. It never chooses a limit. If you set none, it accrues everything that it finds and says so.
9. Which reporting framework, and which tax country or state?
   The framework affects how the output shows some items and how it measures them. The tax rules affect tax recovery and the employer's payroll tax on pay accruals.

The basis question matters because the two bases put the same item in different years. For US tax, the cash method reports income when you receive it and usually deducts a cost in the year that you pay it⁵. The accrual method includes income when all events that create your right to it occur and you can calculate the amount. It deducts a cost when all events that create the obligation occur and the other party provides the service⁵. Those are tax rules. Your books and your tax return can put an item in different years, so ask your accountant about tax.

Then the skill reads the plan back and waits for your yes. This is the skill's own example:

"Accruing for Northbrook Trading for 1–30 September, accrual basis, with the books read from your Mosofin connection. In scope: bonus (from the $240k pool you gave me), interest on the term loan, utilities, audit fees and deferred revenue. Accruals reverse on day one; materiality $500. Shall I go ahead?"

On this page, the $240k is the managing director's best estimate of the year's bonus payout. The skill's example calls it a pool. The skill accrues the estimate month by month.

Connect once, or upload six kinds of file

Eight sheets, from the summary to the coverage

It asks whether you want an Excel file before it makes one. If you say no, you get the same sheets as tables in the chat. It waits until you see and approve the results. Then it offers to save your categories, limit, framework, tax country, reversal policy, accounts and methods for the next run. It saves them only if you say yes. It never saves your connections, tool settings or test-data status.

Seven terms, in plain English

Accrual basis

You record income and costs when they happen, whatever the date of the cash¹. On the cash basis, you record them when the cash moves.

Accrual

An entry for a cost or income that happened before anybody billed or paid it³.

Deferral

An entry that moves income or a cost into a later month, because the cash moved before the work³.

Deferred revenue

Money that customers paid you for work that you still owe them. It is a liability⁴.

Reversing entry

An entry on the first day of the next month that cancels an accrual. The real bill can then go to the expense account without a double count.

Roll-forward

A table that shows how a balance moved from the start of the month to the end.

Materiality threshold

The size below which an item is not worth an entry. The skill still totals the small items.

Where the facts on this page come from

The sources are two sections of an accounting textbook, an international framework, a US standard update and a US tax publication. We found each one on 28 October 2026 in search results. We did not open the pages, so follow each link for today's wording. What the skill does comes from the skill's own files.

1. OpenStax: Principles of Accounting, Volume 1, 4.1 Explain the Concepts and Guidelines Affecting Adjusting EntriesAccrual accounting records income and costs in the period that you earn or use them, whatever the timing of the cash.
2. IFRS Foundation: Conceptual Framework for Financial ReportingAccrual accounting shows the effects of events in the periods in which they occur, even if the cash moves in a different period.
3. OpenStax: Principles of Accounting, Volume 1, 4.2 Discuss the Adjustment Process and Illustrate Common Types of Adjusting EntriesThe matching principle puts each cost in the period of the income that it helped to earn. Deferrals are prepaid costs and unearned income. Accruals are income earned but not yet billed, and costs used but not yet paid, for example interest and wages.
4. FASB: Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606)Money that a customer pays before the business delivers the goods or services is a liability. The standard measures it at the amount that the customer paid. This is a US standard.
5. IRS: Publication 538 (01/2022), Accounting Periods and MethodsUnder the cash method, you report income when you receive it, and you usually deduct costs in the year that you pay them. Under the accrual method, the all-events test and economic performance decide the year. This is US tax only, and advance payments have their own rules.

No outside authority backs the nine intake questions, the split between reversing and cumulative accruals, the eight sheets or the $500 limit. They are the skill's own rules. We made up Northbrook Trading and every figure in the example for this page, including the 8% payroll tax rate. The 6.5% rate and the actual/365 day count are the example loan's own terms. They are not market figures.