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Accrual basis w/Quickbooks - how to enter bill so expense is reflected in correct month?

Quickbooks accrual vs cash basis accountingHi- I have recently began consulting at a company that uses Quickbooks.  They are on the accrual method.  

Right now, if a bill is received in May, dated in May, but relates to services provided in April,  the Company enters the bill date as April 30, in order to make sure the related expense in April.  

However, that throws off the AP aging as bills will show up to be paid earlier than they really are due.  

The other way this could be handled is to book a journal entry in April (debit expense, credit accruals) once we either know the amount of the bill, or can estimate the amount of the bill.  Then when the bill is received, debit accruals when the bill is entered.  But both of these seem to be a workaround.  

Am I missing something, or does Quickbooks really not provide for a different expense date other than the bill date?

Answers

Ted Monohon
Title: VP -Finance / Controller
Company: Fantex
(VP -Finance / Controller, Fantex) |

My recollection is that QB does not allow a different expense date and your two methods on how to deal with that are the only options.

Sarah Jackson
Title: Associate Editor
Company: Proformative
(Associate Editor, Proformative) |

Proformative offers 400+ online business courses with free CPE, many on QuickBooks.

Karen Adams
Title: Owner
Company: KJA Associates, LLC
(Owner, KJA Associates, LLC) |

If you have an actual invoice keep the date as 4/30 to record in proper period but manually change the due date to correspond with the actual date of the invoice. I also recommend incorporating the actual invoice date in the invoice# field so that you know why the due date may not appear correct based on posted invoice date. All QB versions I'm familiar with allow for the manual entry of the due date when you enter an invoice.

Joseph D'Urso
Title: Controller
Company: Agile Therapeutcs, Inc.
(Controller, Agile Therapeutcs, Inc.) |

I use this same approach at my company and it works very well. Expenses get recorded in the proper period, and the integrity of the A/P aging is maintained.

Topic Expert
Christine McKay
Title: Controller/Finance
Company:
(Controller/Finance, ) |

If you have already closed the month of April then dating the invoice as 4/30 will cause your April financial statement to change. If that does not matter then accrue the expense in April and reverse the entry in May. Enter the invoice in May with the actual invoice date so it will age appropriately. The expense will be in April and your invoice entered in May will be cleared from the reversal entry. QB has a reverse option at the make journal entry function. AP accruals are common especially for invoices not received by month end. Keep a list of those which are typical accruals such as utility bills, freight invoices, rent, and sometimes common area maintenance, etc.

Hope this helps!

Topic Expert
Barrett Peterson
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

You have your two options above: record with a April 30 posting date, and change the due date, or accrue with automatic reversal, and record the invoice in May. For the occasional item, the former may be more practical. For more frequent occurences, the latter may be more efficient.

Anonymous
(Founder) |

I've joined this nonprofit last month (in Q3) without handover with previous controller.

Since beginning of the FY, insurance invoices have been recorded as he noted above - by invoice date not the actual month of coverage.

Moving forward in Q4 I'm adjusting invoice date as noted in this thread.

For past 3 quarters, can I go back and make adjustments to the invoice dates to accurately reflect month of coverage? She hadn't reconciled the bank from beginning of year or "officially" closed out any months, however, we did report to 2 grants already.

Please advise. Or you think I do a end of FY adjusting entries instead?

Thank you,

Sonya Graywolf
Title: Owner
Company: Sonya Graywolf, CPA
(Owner, Sonya Graywolf, CPA) |

I enter the posting date of the last date of the month that the expense needs to be matched to as others have suggested. I also change the due date. However, in the description line next to the amount I state the original invoice date and that the expense was a "name the month" expense so that others know what was done when looking at the bill.

I really wish Quickbooks would figure out a way to handle this.

les Ordway
Title: Financial Consultant - collateral audito..
Company: CEB ABL Audit Group
(Financial Consultant - collateral auditor, CEB ABL Audit Group) |

Agreed! One solution is for QB to track two dates...Posting Date and Document Date. The Posting date would default to the Document date. If the Document date is in a period which has been closed (i.e. arrived late) then the posting date would default to the 1st of the new month. The aging reports would age based on document date and only include transactions posted on or before the aging report date (so that the aging report totals match the trial balance).

Anonymous
(Founder) |

I've joined this nonprofit last month (in Q3) without handover with previous controller.

Since beginning of the FY, insurance invoices have been recorded as he noted above - by invoice date not the actual month of coverage.

Moving forward in Q4 I'm adjusting invoice date as noted in this thread.

For past 3 quarters, can I go back and make adjustments to the invoice dates to accurately reflect month of coverage? She hadn't reconciled the bank from beginning of year or "officially" closed out any months, however, we did report to 2 grants already.

Please advise. Or you think I do a end of FY adjusting entries instead?

Thank you,

Anonymous
(Agent) |

A. When you enter a "Bill" (the AP invoice), the invoice date will be used for the accrual expense. In the accrual basis report the transaction will appear with "Bill" next to the invoice date.

B. When you "Pay Bills", the payment date is used as the cash basis transaction date. In the cash basis report the transaction will appear with "Bill" next to the payment date.

While it seems that QB is set up to report both cash basis and accrual basis reports, Intuit has made it very clear that cash basis may not be actually cash basis as defined by accounting standards or tax basis methods of accounting.

Certified Advanced Pro Advisor

Topic Expert
Jaime Campbell
Title: Chief Financial Officer
Company: Tier One Services, LLC
(Chief Financial Officer, Tier One Services, LLC) |

Simplest solution: Yes, keep using the April 30 date on the bill. Enter the due date as appropriate and adjust your settings so that your aging reports are based on the due date, not the bill date:
Edit>Preferences>Reports & Graphs>Company Preferences>Age from due date

Anonymous
(Founder) |

I've joined this nonprofit last month (in Q3) without handover with previous controller.

Since beginning of the FY, insurance invoices have been recorded as he noted above - by invoice date not the actual month of coverage.

Moving forward in Q4 I'm adjusting invoice date as noted in this thread.

For past 3 quarters, can I go back and make adjustments to the invoice dates to accurately reflect month of coverage? She hadn't reconciled the bank from beginning of year or "officially" closed out any months, however, we did report to 2 grants already.

Please advise. Or you think I do a end of FY adjusting entries instead?

Thank you,

Anonymous
(Sr. Manager, Accounting & Finance) |

This feature isn't available because you are describing the exact use of an accrual. If the company is purchasing an item or having work performed, they should have a purchase order or quote (prefer not to exceed) that has the purchase price (accrual amount)/

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