Hello
Sorry not sure if anyone already discussed this issue as search result did not return I was looking for.
Say there was motor insurance expenses of £500 on 01/10/2016 while the accounting year end is 31/03/2017.
It would be better if there was option to split the amount evenly from 01/10/2016 for 12 month i.e the summary for Period End 31/03/2017 will only show £250 of that expense in Motor Expense.
thanks
Hello, to split is a good thing, but here is a better accrual accounting concept method.
There are two account receiving the payment.
There is also the bank/cash account involved and the Insurance provider (ABC Insurance).
Instead of the split method. Do the right thing by involving the two accounts.
In the same payment, use the two accounts
Insurance Expense — 250 (Expense)
ABC Insurance ---------250 (Asset)
In the beginning of the next period
Dt: Expense account
Ct: ABC Insurance
I don’t know what others may think, but split thing is not a proper thing. I don’t think it will at the end of the first period display the prepayment on the balance sheet which will be bad financial reporting. I am sure it will not present the prepayment under asset. The above method however will clearly show. This doesn’t make your work easy, but that is true financial reporting
@cometomama Right after entering the payment, enter the journal entry that will Debit the expense account and credit ABC insurance so that it doesn’t escape you, just make sure the date of the journal entry is changed to the first day of the beginning of the next period.
When the beginning of the next period comes, Manager will effect the journal entry
Thanks Abeiku
I am already doing that i.e recording two entries one in current period and the rest of the split in next period.
The idea was to suggest it as feature to @lobus
As most of the account are presented on accrual basis rather cash basis hence it make sense to also have function to spilt the invoices received right from the beginning without fiddling with journals or creating another entry in next period.
How is this possible - an invoice can only have one actual date, so you can’t have the transaction within that invoice being posted to two separate dates. Otherwise the transaction would remain unbalanced until the second date arrived - try reconciling accounts with this occurring.
Sorry for late reply. You are right however to satisfy the accrual based accounting principle in this scenario the cost of insurance needs to be allocated to relevant accounting period.
There are few ways to it now 1) creating journals or creating another purchase invoice with the same reference at the beginning of next accounting period. I like the later as it easy to teach 
.
Two points, @cometomama:
If you create a second purchase invoice, your records do not match your expenditures. While underlay accrual basis accounting an expense should be recognized in the period during which the income it is related to is earned, entries should also match actual transactions. If you pay 500 in advance for insurance, the payment should record 500. One twelfth should be posted to the current expense account and the remainder to prepaid insurance account.
Making accounting decisions based on what is easy to teach is poor reasoning, especially if what is taught is wrong as a result.
1- I agree however Manager is targetting both accrual and cash basis reporting in this case and is more useful to cash basis users. To adjust the Manager dashboard accrual based view, one have to either make journal entry to adjust the expenses with prepayments or take my wrong approach . FYI any excess amount paid on account shows as prepayments anyway. Cash accounts are balanced. revenue expenses are adjusted. Only thing happening is invoice splitting.
2- I agree but you are forgetting the leaner is not only learning traditional accounting techniques but will also learn how to fix the problem to get accurate results leaving additional information behind.