Accrual

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Some expenses may be incurred but not paid yet in the financial month that you are reporting. For the purpose of matching revenue against expenses, it is required to recognize (capture) the expenses first in the profit and loss statement, meanwhile, reflect in the balance sheet as a liability owed reflected in the quantum(dollar) value as a line item in the current liability to show that the amount is owed by the company but not paid yet.They are usually general purchases of goods and services or non-trade in nature, or  other than the regular suppliers as reflected in the trade creditors accounts.


At [A/c Entry], click [GL Journal]

 

Click [Add]

 

 

 

Example :

Telephone bills dated 14/04/2020 for expenses incurred in March 2020, amount $145 inclusive of GST.

Your year end is 31/03/2020 and you are to provide for an accrual of this amount in your profit and loss account as at 31/03/2020

 

 

COA

Debit

Credit

Telephone Bills        

O-T001-1

135.51

 

Accruals

F-A001-1

 

135.51

    Being telephone bills accrued for March 2020 accounts

    Enter the information as per [1] to [10]

 

Note: For the purpose of accrual , do not accrue the GST portion, as the GST account may be zero off already.

Subsequent months, when payment is made,

 

 

COA

Debit

Credit

Bank

D-B001-1

 

145.00

Accruals

F-A001-1

135.51

 

GST - Input Tax

D-G001-1

9.49

 

 

Note: GST-input tax will be captured in April 2020, in the month as it was paid.

 

Or at Purchase Journal

 Click A/c Entry --> Purchase Journal --> Add

 

 

 

Next, go to the topic , Bank Transfer


 

Related Topics

Reclassification

 

Accrual basis vs Cash Basis accounting

 

Recurring

 

 

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