In accounting, you must report an expense or income in the same period in which it was incurred or earned.  We use Accruals to provide for such expenses or income.  All accruals are the same in nature: you do not have a source document yet, but you know that the expense or income has been incurred or earned.

NOTE:

When using accruals, you will not post values to supplier accounts, but straight to the general ledger account, making use of a Provision for Future Expenses account.

Before processing the journal, you will need to create a new general ledger account.

To create the Provision account

  1. Select Edit… General Ledger… Accounts from the menu bar.
  2. Select to create a new account.  The Provision for Future Expenses account must be created as a Balance Sheet account.

To process Accruals

  1. Open the Process… Journals screen.
  2. Select the Accrual journal from the list of available journals.

NOTE:

Tax is never included on accruals, as tax only becomes liable once there is documentary proof of a transaction.

  • Click on Update to update the batch.
  • Select to Automatically Reverse Journal.
  • Click on Update.

Automatically reverse Journal

When posting accrual journals in a period, you will need to reverse it again in the next period.  The system can do this for you automatically.

This option displays when you are updating an entry type (journal) that is set to allow transactions for general ledger accounts under Setup…Entry Types… On Account Access, set to General Ledger.

If you wish to reverse the batch in the next period, tick the check box.  If you untick the check box, no reversals occur.

There are two periods where the system behaves differently:

  • If you are processing a batch in the last period of the current financial year, the system cannot reverse the batch in the following period, unless you are using period 13 as the first period of the next year.
  • If you are processing a batch in the last period of the previous financial year, the system creates a new batch using the first period of the current financial year.  You then have to update the batch manually.
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