Revenue / Cost Accruals

Purpose

Revenue / Cost Accruals is a way of distributing the revenue / cost accruals into periods where the revenue / cost should have been taken.

Procedure

Example

You pay a yearly Insurance for your stocks for $2000. This is paid in January. Credit Bank Account $2000. Debit would be an accrued balance account in the assets section. Not the normal expense account for insurance.

Now you decide to Accrual this expense from your accrued balance account into the expense account for insurance during 12 periods of 1 month.

This is what this module handles, but with more selectable frequencies!

Tips and Tricks

Lease Rent Example

Assume you pay an annual lease of Rs. 40,000/- in April (Indian Accounting year begins on Apr 1st and ends on Mar 31st but the govt is looking into fiddling with it now) and would like to account for it as an expense each quarter to help with proper costing of overheads, then this module will apportion the amount into 4 equal parts as if payable at the beginning of each quarter.

2015-04-01 By Property Owner  Cr. 10000
2015-04-01 To Lease Expenses A/c                    Dr. 10000
2015-05-16 To Property Owner                        Dr. 40000
2015-05-16 By Bank Chq A/c    Cr. 40000
2015-07-01 By Property Owner  Cr. 10000
2015-07-01 To Lease Expenses A/c                    Dr. 10000
2015-10-01 By Property Owner  Cr. 10000
2015-10-01 To Lease Expenses A/c                    Dr. 10000
2016-01-01 By Property Owner  Cr. 10000
2016-01-01 To Lease Expenses A/c                    Dr. 10000