via Investopedia.org - Accruals

"Financing Using Operating Liabilities

The reason financing operating assets with operating liabilities is better than financing operating assets with non-operating liabilities is twofold. A company that is financing an inventory glut, versus a healthy inventory expansion, will have little cash from sales to extinguish payables. The firm may eventually extinguish payables by taking on debt or selling financial assets or stock. Further, trade creditors are motivated to continuously verify the quality of the debtor's operating assets that are available to satisfy their claims. The inability to rapidly increase accounts payable in the face of rapidly increasing operating accrual assets may be a reflection of suppliers' negative assessment of the quality of these assets and may be a sign that the company is carrying these assets at greater than their true value.

So if a firm is experiencing rapid growth in accruals, it doesn't mean that management is necessarily manipulating earnings. This rapid accrual growth could very well be justified by rapid growth in the business. By looking into the financing of the firm's operating assets, the analyst can get an idea of the quality of the assets on the balance sheet, and therefore an idea regarding the soundness of the firm's growth."

In terms of GBN.V's balance sheet, accounts payable greatly exceeds costs and are actually where accruals arise in a form of inventory glut. This examination of Accrual Accounting is entirely valid vis-a-vis yearly audited financial reports for GBN.V.

GBN.V has been selling unrefined gold held in escrow through marketable securities in payment in kind swap for cash, and that this is ultimately a growth strategy. Instead of financing using borrowings at usurious interest rates, or going to market to raise funds, accrual accounting can be used to achieve the same ends.

These results should be borne out in the Q4 fiscal 2014 report which is due in late August. Logically accounts receivable should see a huge spike.

http://www.investopedia.com/university/accounting-earnings-quality/earnings8.asp

Has GBN.V grown since commercial production began, and is there room for expansion? Both Roy Lloyd and Komis have grown as deposits, while a major, intensive effort on the ground is visible in the Mallard Lake deposits, though it goes unreported.

Some people might see all of this as small potatoes, but the big deal is that financing your own expansion is actually possible in this context.

I have no way of knowing whether the adopted IFRS accounting standard requires the reporting of accruals.

-F6