Converting % of completion accrual to cash basis

[David]

I have a client whose financial review accrual basis statements are booked using the % completion method and accrual basis. The client's S Corp tax return reports cash basis.

 

For those who have construction clients or clients who use % of completion -

 

When I convert from accrual to cash should I only consider AR and AP and not adjust for the Billings in Excess of Costs or the Costs in Excess of Billings accounts?

 

My thinking is that similar to a cash basis taxpayer who reports inventory, the cash basis tax return would still want to reflect matching of revenues and costs.

 

Am I doing the accrual to cash conversion correctly for this?

 

Thanks.