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Can I make Accrual entry for future expenses?

Forums › ACCA Forums › ACCA FR Financial Reporting Forums › Can I make Accrual entry for future expenses?

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by Kim Smith.
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    Posts
  • January 14, 2019 at 11:17 am #501681
    tinolo1988
    Participant
    • Topics: 14
    • Replies: 12
    • ☆

    The employee bought a air ticket of $1000 on Nov 2018 for business trip on Jan 2019, and made a claim for it.
    the claim hasn’t been settled til 31.dec.2018 as year end date.

    I would like to know if I make a journal entry below is correct:

    Dr. Prepayment 1000
    Cr. Accrual 1000

    Thank you very much.

    January 15, 2019 at 10:45 am #502022
    Kim Smith
    Keymaster
    • Topics: 133
    • Replies: 8284
    • ☆☆☆☆☆

    That would work. The entries in 2019 would be:

    Dr Accrual/Cr Cash when the employee is reimbursed the expense

    and

    Dr Travel (expense)/Cr Prepayment to recognise the expense in the correct accounting period (2019)

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