DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Acruals and Prepayments


#1

how do we enter accruals and prepayments in the manager specially when the bank interest is dates outside the relevant closing date.

thanks


#2

You need to furnish more information. Accrual of what? Prepayment of what? And who is doing the prepayment, you or a customer?


#3

Essentially by General Journal - especially if they are balance day adjustments, then you would reverse them the following year.
An accrual could be taking up a pro rata proportion of a term deposit’s interest where the interest is only paid at maturity - x mths before balance day and y mths after.
A prepayment could be where you had a substantial cost 2 months from the year end, but you want to spread it over a period - a 3 year subscription

The best result would be if Manager had a facility for recurring or memorised transactions- take up interest monthly or allocate subscription annually. This memorising of transactions is on my Manager’s Wish List as it would reduce my input workflow by 15% - but that a subject for a future topic


#4

I mean interest received outside the closing date and do I go to journal entries and make an entry there and how or there are some other ways as well to make entries.

I am new to manager


#5

I mean interest received outside the closing date and do I go to journal entries and make an entry there and how or there are some other ways as well to make entries.
I am new to manager


#6

I don’t get it


#7

If you mean after the closing date of an accounting period, you just enter the transaction as normal. Manager is a perpetual accounting system. Nothing closes. Only reports and the Summary display are for defined periods. The database retains all information entered unless you delete it, which you should not do unless you have made a mistake.

If you are referring to the lock date, that is only to prevent unauthorized changes to historical information. If you need to modify something before the lock date, you just remove the lock date.


#8

Do you mean that interest has been earned up to the closing date but won’t be paid/received until after the closing date?

In this case you create a general journal dated the closing date taking up the value of the interest earned up to the closing date. Debit current asset account “unpaid interest” and credit income account "interest received"
When you receive the interest you do a single bank deposit, but the amount is split into two entries - 1) an amount equal to the “unpaid interest” account posted to the “unpaid interest” account and 2) the balance posted to the income “interest received” account.

You can use any current asset account which you clear transactions though if you don’t want to create an “unpaid interest” account.

If this hasn’t answered your situation, could you please provide more details


#9

These are done by Journal Entry at the end of the financial year and then reversed on the 1st day of the new financial year.


#10

By reversing on the first day of the new financial year the P&L would show a negative interest received. That maybe ok if the interest was also received in the first month, otherwise you have to keep doing and reversing End of Month General Journal entries until the interest arrives.

If your business only does EOY adjustments and doesn’t worry about EOM adjustments, then it would be simpler to leave the EOY adjustment in the BS and clear it when the interest arrives…


#11

That’s fine. The timing of the reversing Journal Entry(s) is entirely up to you. You will have to remember when you receive the interest to do the reversal otherwise your Profit will be overstated. If you don’t want to do the reversal you also have the option of posting (categorizing) the receipt of the interest directly to the Accrual a/c on the Balance Sheet.