Prepaid Expenses and Accrued Expenses

During year transitions, a situation may arise where the budget year of the order and the invoice are different.

To handle this issue, the system can be configured to record the transaction against a prepaid expenses or accrued expenses account.

When the invoice budget year is after the order budget year, the transaction will be recorded against the accrued expenses account.

When the invoice budget year is before the order budget year, the transaction will be recorded against the prepaid expenses account.

For this posting to be performed automatically during export from the system, the prepaid expenses and accrued expenses items must be defined in the budget edit screen (it is also possible to define only one of them).

Accrued expenses transaction posting (invoice after the budget year of the order item):

1. Debit expense (previous year [31/12]), credit accrued expenses (previous year [31/12])
2. Debit accrued expenses (current year [invoice date]), credit supplier (current year [invoice date])

Prepaid expenses transaction posting (invoice before the budget year of the order item):

1. Debit expense (next year [1/1]), credit prepaid expenses (next year [1/1])
2. Debit prepaid expenses (current year [invoice date]), credit supplier (current year [invoice date])

Advanced option: if we want the mechanism to be activated only for certain items, we can define a basket containing the relevant items.

Please note! The accrued expenses mechanism should be activated on 1/1 and stopped when the books are submitted for audit, in order to prevent additional transactions from being recorded in books that have already been submitted.