Accruals/Prepayments - Reversals

System

Hi guys<BR><BR>Think I understand the principles involved here, but everytime I go to write my notes up I feel as if I have got it wrong after all, can someone help please???<BR><BR>eg accruals - company year Jan-Dec 05, an invoice arrives Jan 06 for say £100 which relates to Dec 05, the amount is debited to the appropriate expense account in the 05 accounts, and credited to accruals. Then do I need to do an adjustment to P&L to clear the accounts???<BR><BR>Then in 06 accounts, do I credit the expense account and debit the accruals account??? <BR><BR>I feel myself getting in a pickle again, and I know my brain won't work in reverse to sort out <BR>pre-payments/reversals.<BR><BR>Can someone please put me out of my misery, (humanely of course).<BR><BR>Once I've got it clear I will be able to move onto something else, but for now I'm in limbo!!<BR><BR>Thanks in advance.<BR><BR>Tracy

System

Accruals/Prepayments - Reversals

Hi Columbia<BR><BR>Yes, in Dec 05 accounts debit the expense in the P&L, credit the accruals.<BR><BR>In 06 accounts, debit accruals and credit expense as if you don't, it will in effect be in twice. Once when the accrual was made and again because of the invoice.<BR><BR>Regards<BR>Steve

System

Accruals/Prepayments - Reversals

Thanks Steve for your quick reply, thought I had it but just needed confirmation!