Explore GAAP requirements for accruals, deferrals, and adjusting entries
Now you'll experience exactly how month-end closing timing affects business decisions. In this simulation, you'll predict business consequences of slow vs. fast closing, then see the real impacts.
Sarah has a new retainer client: TechStart Fitness Studio pays $1200/month in advance for consulting services. By the end of the month, Sarah has completed $800 of work that she hasn't billed yet. She also has $300 in prepaid software expenses, of which $150 has been used this month.
The Timing Dilemma
Sarah needs to make an important pricing decision for a new client proposal. She also needs to send current financial statements to a banker considering a loan. The question is: How does month-end closing timing affect her ability to make these decisions confidently?
Cash-Based Ledger (Current)
Shows: Cash received $1200
Doesn't show: Earned but unbilled $800
Accrual-Based Closing (Needed)
Will show: Total revenue $2000
Plus: Proper expense recognition
Imagine Sarah's month-end closing takes 4 days instead of 4 hours (her target). What business consequences will this delay create? Make your prediction before we reveal the actual impacts.
1. Decision Speed: How quickly can Sarah make her pricing decision?
2. Opportunity Cost: What business opportunity might she miss?
3. Stakeholder Confidence: What does the banker experience?