Current corporate disclosures regarding carbon emissions lack commonly accepted accounting rules. The carbon accrual accounting system described here takes the rules of historical cost accounting for operating assets as a template for generating a Carbon Emissions (CE) balance sheet and flow statement. The asset side of the CE balance sheet reports the carbon emissions embodied in operating assets. The liability side conveys the firm’s cumulative direct emissions into the atmosphere as well as the cumulative emissions embodied in goods acquired from suppliers less those sold to customers. Flow statements report the cradle-to-gate carbon footprint of goods sold during the current period. Taken together, balance sheets and flow statements generate key indicators of a company’s past, current and future performance with regard to carbon emissions.