How do you get transactions to appear in the “Future Commitments” column as opposed to “Liabilities” ? As a non-accountant this looks like something that would be very useful for me, but I can’t see how/where it is used (have searched this Forum and the Guides).
Could someone give a specific example of a transaction that would cause it to appear in that column ?
I guess so (I’m not an accountant, so am not sure of any of the terminology !). It appears in the “Summary” screen in the “Liabilities” section - it sounds like something that would interest me. As an example, I’ve booked someone to play a piano for us in March next year. To my simple mind it’s a “future commitment” rather than an “account payable”… or am I completely misunderstanding ?
Until the piano playing services are actually incurred your concept of “future commitment” is outside the scope of an accounting system. An accounting system is used to record actual business transactions, not commitments. In the financial statements for large reporting entities, they disclose capital commitments under notes to financial statements.
Thank you Brucanna - and my apologies to everyone. I can only assume I must have created the “Future Commitments” account at some point; I had assumed it was part of the basic package. Sorry for any confusion.
I don’t really have any “accrued expenses” to track, but you could probably treat it in the same manner as I treat “Prepaid expenses”
For prepaid expenses I created a “Prepaid Expenses” Account and made it a control account tied to special accounts. I then create Special accounts for the various types of Prepayments I make e.g. “Prepaid Insurance”, “Prepaid Rent” etc. The invoices are charged to these special accounts and then the expense is released from them by monthly recurring Journal Entry.
Accrued expenses being the opposite (where you incur the service and pay later) could be handled in the reverse manner. Create the accruals by JE or recurring JE and then when the invoiced is actually received after the fact charge it to the accrual account to clear the accrual and create the payable.
You could use this same method for to defer revenue on a sale, e.g. if you rent out a building or machine and receive a years rental in advance. Charge your sales invoice to a Deferred Revenue Control account linked to special accounts and create a special account for each leased building etc. Of course if your business is selling subscriptions or something this method becomes a bit impractical.