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How to record end of year accrual entries

GA SU's Profile

end of year accrual accounting entriesHi, I would like to know if anyone has any advice. We had expense incurred in December but I received the actual bill [invoice] from supplier end of January. If I enter the expenses as accrual in December as an GJ then how do I enter the bill in January. I always have specific accounts for cost of sales. How will it affect when the payment made. I am using MYOB. thanks SG


Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

When you accrued the expense, did you do an auto-reversing accrual? If the expense was not auto-reversed, you must manually reverse it, then record the actual expense. For instance:

December 2012, To accrue expense
Expense account: 500
Accrual account: <500>

If you did not auto-reverse it, then

January 2013, To reverse accrued expense

Accrual account: 500
Expense account: <500>

Then record your AP voucher from the supplier as usual.

Title: General Accountant
Company: TMS
(General Accountant, TMS) |

Thanks Chris,
Instead of creating accruals. Is it possible to record AP voucher in December instead of the month the supplier invoiced. The invoices are dated for January.


Topic Expert
Doug Thompson
Title: Director of Revenue
Company: Castlight Health
(Director of Revenue, Castlight Health) |

SG, you could do that, however that is not the preferred method, because your books should be closed for December. Sometimes the invoice comes in at a slightly different amount than the accrual. Using the method Chris describes the difference would be recorded in January. That way you don't have a situation where "the numbers keep changing" after you have published them.

But if you're a tiny business and no one cares about that, then you could do as you suggest.

Sara Voight
Title: Controller
Company: Critical Signal Technologies, Inc
(Controller, Critical Signal Technologies, Inc) |

I don't recommend booking an accrual in your AP system. If you are dealing with PO's, there might be some automatic posting of accruals as PO's are created. The accrual would then be automatically reversed when the PO was cleared with the invoice.

Most systems have a mechanism for an automatic reversal (even QB has a reverse option you can select). I also advocate for the creation of an accrual account for the monthly in/outs. This allows you to review the account to make sure everything reversed at the beginning of the next month to avoid any duplicate charges. Longer term accruals would still be posted to their original accounts.

The other option you have is to make the accrual and then pay out of the accrual account. The downside to this is remembering to reconcile any differences promptly.

Shortcuts tend to create problems down the road. Detail is the key and being able to keep your books in a fashion that another accountant could step in and run things easily is an important goal.

Title: General Accountant
Company: TMS
(General Accountant, TMS) |

Thank you so much everyone.
Yes we are a small company, but if I entered the January payables now in December it will affect my HST amount. I already filled HST for 4th QTR. I always enter payables as we receive the invoice from suppliers. Just this time my boss want to apply the expense to the income we received since the expense is actually occurred in December for the job.


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