Prepayments & Accruals

Prepayments and Accruals are transaction templates which can be used to spread transactions over multiple accounting periods.

To access this option select File > Financial > Prepayments & Accruals from the main menu or click the Prepay & Accrual button the Financial section.

What are Prepayments and Accruals?

Prepayments and Accruals are for costs that are recorded at the beginning or the end of a specified period but represent an amount that actually covers a number of different months. For example rent for an office may be billed quarterly and paid at the start of that period however rather than record the full amount of the transaction in one month you want to spread it accordingly over each of the three months it represents. An electric bill is received and paid at the end of a quarter. Rather than record the full amount of the bill in one month at the end of that quarter you want to spread it across all three months. Where the transaction is recorded at the start of the period it should be defined as a Prepayment. Where the transaction is made at the end of the period it should be defined as an Accrual.

This facility is used to set-up the templates to record these transactions to spread them across multiple months or periods. The original cost transaction must be recorded separately in the same way as you would normally enter that type of transaction. The reverse transaction and the monthly instalments will then be automated by posting the templates you set-up in this option. For example for a Prepayment for office rent you will record it as usual on the date of the bill and specify the Rent account that the amount will be posted to. You then set-up your Prepayment template through this option and post it. The first posting will reverse the affect of the full amount of the original transaction on the Rent account and then post an amount to the account to represent only the first month's instalment. The net affect on your Profit & Loss for the current month will represent only the first month's instalment of rent rather than the full amount for the quarter (as entered on your original transaction). In the case of Accruals the reverse postings are made when the very last instalment is posted.

The Prepayments & Accruals window enables you to set up one transaction template at a time. You enter the basic information about the transaction in the top part of the window.  Each template can be assigned to any number of financial accounts as are required and these, along with their respective values, are entered in the entry grid at bottom part of the window.  

To enter a Prepayment or Accrual entry complete the details as explained below :

Description

Enter a description for this template. This is used to identify and to locate the template when required. This can be up to 50 characters. If you want to locate and edit or view an existing template then you can click the magnifying glass button to lookup and select the relevant one.

Type

Select the type of this template, either Prepayment or Accrual. Click the down-arrow button or press Alt+DownArrow on your keyboard to drop-down the options to select from. This cannot be changed once any postings are made from this template.

No. of Months

Enter the number of months that you want the total amount of the template to spread across.

The fields displayed under Posting Details, on the right, are for reference and display purposes only and cannot be changed.

Last Posted

Displays the date on which this template was last posted. This will be blank if the template has not yet been posted.

No. of Postings

This displays the number of times that this template has been posted.

Next Post

Displays the amount that this template will post to your accounts the next time it is posted. Generally this will be the total amount of the template divided by the number of months specified however the software also takes care that the total amount is fully posted regardless of rounding issues. For example if you choose to post 1,000.00 over 3 months, the first 2 months will post 333.33 and the final month will post 333.34.

The bottom section of the window is used to enter the financial accounts, the values and VAT information about the transaction.

Lines Toolbar

Above the entry grid is a toolbar which contains key options related specifically to working on entry lines :

Click the Add New Line button to add a new line at the bottom of the existing lines.

Click the Remove Line button to remove the currently selected line.

Click the Insert New Line button to add a new blank line above the currently selected line.

Click the Copy Line button to copy the details on the selected line to a new line added at the bottom of the list.

Complete the entry grid columns as explained below to specify the account to post to and the amounts involved :

Account Ref.

Enter the reference of the financial account you want to use on this line of the template. You can begin typing the account reference and a drop-down list of matching accounts will be displayed for you to select from. You can also click the down-arrow button or press Alt+DownArrow on the keyboard to display a drop-down list of all accounts. Once an account is selected the account name will be displayed in the Account Name column.

Details

Enter a note or description related specifically to the line for the specified account. This will default to the main template details entered. This is useful if there is some additional information you want to record about the specific line within the transaction that will appear in transaction reports and lookups for the account specified. This can be up to 80 characters.

Value

Enter the total value that you want to be recorded for the account on the line over the specified number of postings.

Toolbar

The options on the Toolbar at the top of the window are used to carry out tasks related to the entire recurring entry you are working on :

Click the New button to add a new prepayment or accrual template.

Click the Save button to save the details entered or changed for the prepayment/accrual template. Once saved you can continue editing the template.

Click the Save & Close button to save the template you have entered and close the window immediately after completion.

Click the Delete button to completely remove the prepayment or accrual template record.  Please note : Deleting the template has no effect on transactions already recorded from it.

Click the Updates button if you want to process transactions from the currently selected template. This will ask you to confirm that you want to post the template first and you can click Yes to proceed. The software will use today's date (the date entered at sign-in) as the date for the newly processed transactions.

Please note : To post all prepayment/accrual template and to specify a particular date to post them on use the Post Prepayments & Accruals option available by selecting File > Period End on the main menu.