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- This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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- December 10, 2020 at 11:45 am #599059
Hi all
I have a quick question based on my actual work/responsibilities.
If we have an invoice from a supplier, invoice date 3rd November, but the description states that there are ‘consultancy services for October’ of £100, we should recognize it as expense on the P&L in October I assume? As the cost incurred relates to October regardless of the invoice date?
And the invoice should be referred to as ‘October invoice’?So what I’d do is to accrue £100 in October, Dr Expense £100 and Cr Trade Payables £100. Then in November when the invoice is processed, I’d reverse the accruals and then it would be Dr Expense and Cr Trade Payables with the actual invoice amount (in this case the same values)?
Can anyone confirm whether this is right and in accordance with the accruals accounting principle (i.e. date when the service is consumed)?
Many thanks in advance, you’d ease my work if you can clarify this to me please!
December 10, 2020 at 2:45 pm #599104Assuming that your company prepares monthly accounts (or that your company year end is October) then what you have written is correct.
However there is no law or accounting standard that actually requires accruals to be dealt with monthly – it is only at the year end that they have to be dealt with.
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