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Accruals entries in Sage

Client has accrual for electricity sat in accruals account from previous year.
Invoice has now arrived. Can anyone advise as to what entries need to be made
to show correct expenditure in this year.
Thanks in advance
Yvonne

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By Anonymous
27th Mar 2007 15:41

Thanks to everyone for your advice
I am left with just one query.
If I follow Jane's advice then the electricity expense is left understated for the year whereas if I follow Graham's advice the electricity expense is left overstated for the year. How do I deal with the outcome?
I would like Sage to show the correct amount for annual electricity expense without having to rely on a manual note of the adjustment.
Unfortunately I will be away for the rest of this week so will be unable to follow up on any further comments until I return.

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I also agree with Graham
I've found it very difficult to reconcile the accruals account (2109) if invoices are posted there - so I would agree with Graham and always post the invoices to the P&L code, and only use 2109 for journals.

M

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26th Mar 2007 12:20

Post the invoice to the accrual code
I presume the accrual is posted in the 2000 series of nominal codes i.e. 2109?

When inputting the invoice in suppliers module, post the invoice to the same balance sheet code - 2109. The result is that the accrual is cleared from the balance sheet.

If the amount of the invoice is different to that accrued, then a further posting is required. If the accrual was for £100 (for example) and the invoice is for £150 (plus vat) then post £100 of the invoice to 2109 and the remaining £50 to this years P&L account and the relevant code (probably in the 7000 series). If the difference is substantial and your year end accounts aren't yet finalised, you could still amend the original accrual so that the full costs are posted to the relevant trading year.

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By Anonymous
26th Mar 2007 15:06

An alternative method
1. Reverse the accrual with a journal:
Debit accrual code 2109
Credit Electricity (or Light and heat, whatever)
2. Post the invoice as normal to the Electricity code
I believe this is the usual way of doing things but I'll leave it to you to decide whether it is better than the previous respondent's advice.

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By Rehan1
26th Mar 2007 20:32

Reverse the Accruals

I agree with Graham , this is normally done

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By Anonymous
27th Mar 2007 16:51

You'll have to get the accrual right!
The only way out of this is to get the accrual right in the first place. This may be done by delaying the entry in Sage until you are in receipt of the invoice. Alternatively, you could make your first guess of the accrual and then (unless the accounts have already been closed off for the period) update it when the invoice comes through.
I would say, don't worry too much about an accrual not being absolutely precise. They don't need to be and are often not. You just need to be sure that you have a procedure in place that ensures it will not be far out.

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