I have inherited a set of accounts with a prepayment value in the trial balance which has not been reverse since before 2004 and I cannot trace it back further. How do I treat it?
I assume your problem is that you do not know what the prepayment was for, and therefore do not know what nominal to reverse it to.
If the company Year End month has not been changed since 2004, I think it safe to assume that prepayments in the company accounts in future years have been for the same thing(s) each year.
Therefore I suggest that you use whatever detail you have for future years and make a 'best guess' of where it should be reversed to.
Alternativly reverse it to the Profit & Loss nominal and date it 1st of your new year. This can then be corrected by your Accountants at the next year end.
I am concerned that this was not picked up and corrected in the year end adjustments for 2005 which should have been provided by your Accountants.
Have any year end adjustments have ever been posted since 2004? If not then your Balance Sheet will be wildly out in Sage compared with your published accounts. You might want to check this.
Just for reference, this question has also been asked here: http://www.accountingweb.co.uk/anyanswers/question/prepayment-trial-balance
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