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How to record an expense from a prior period?

I just found out about some expenses that were really for last fiscal year and I do not want to adjust my last fiscal year books so what is the best way to account for these expenses in my current year?


(Senior Controller) |

Dr. Expense
Cr. Retained Earnings

If it is material, then you shall adjust your last fiscal year books. Have you discuss this with your tax accountants? This is to find out if it were material enough from the income tax standpoint.

(Director of Finance) |

It is not material. Would you recommend setting up an account titled "Prior period expenses" and debiting this account so that it does not get mixed up with current year operations?

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

If not material, then simply post those expenses to the normal accounts they relate to.
If not material, they cannot by definition be worthy of discussion at all (except to tell the cost center owners once what is being done).
Use the lesson learned to remind people to disclose all future purchase obligations in a timely way, esp as you approach quarter/year end. i.e. tighten up close checklist steps, purchasing controls.


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