Accruals ........... again - The Book-keepers Forum (UK)

Rhianrach · Expert

Accruals ........... again

Susie Sue · Senior Member

yes I think so - an informed guesstimate - based on the previous year maybe? And yes the invoice still gets posted to the supplier account.

Rhianrach · Expert

Thanks Sue,

My next question would be then if I set it up as above then march at the end of the month would show £100 of electricity in that month then in april it would post another £100 so would show as £200 for april, which would be inaccurate wouldn't it or would it just show £100 for the month ?

hmm

Susie Sue · Senior Member

It shouldn't affect the supplier account as accruals and prepayments are posted as journals in the nominal and so not touching the supplier account. When the invoice comes in is the accrual then reversed?

Bit vague I know.....! hmm

Rhianrach · Expert

The accrual reverses itself at the end of the last period so month end in may would post £100 to electricity then reverse the whole lot therefore clearing electricity and accrual accounts.
Just wondering about the monthly management reports being wrong or right.
I shall set some up on the demo company and see. biggrin

Rhianrach · Expert

It appears to show the right amount if you do a monthly profit and loss and this adds up in the ytd side but unless you process a payment after the final accrual it shows a minus figure.

Sort of get it all now :)

semsley · Guru

Accruals and prepayments are journalled between the relevant nominal code (gas (accrual) insurance for year (prepayment) and accrual/prepayment nominal code, monthly or quarterly dependng on when you provide management accounts. On the last day of the month.

On the first day of the following month they should be reversed.

In the case of accruals - when the invoice is received it is posted to the utility company as a supplier and gas/electricity nominal code.

If you use the accrual/prepayment wizard in sage it does this for you, although I don't think it reverses - it's not something I do on a regular basis so you'd have to check by playing around with it.

Sue T · Veteran Member

Hi Steve - Sage Accounts Plus and Accounts Professional have the Wizard if not this is what you need to do: Estimate the total amount of the bill (usually based on previous bills)say for example £300 for the 3 months of March, April and May so this means an accural of £100 per month. On the first day of each month I post an journal of £100 debiting the electricity account and crediting the accural account in Sage journals. When the actual bill comes in (in your example case June) I reverse the accural journal by debiting the accural with £300 and crediting electricity with £300. I then post the correct payment to the electricity nominal through the bank account for the actual value of the electricity bill.
Sue

-- Edited by Sue T on Monday 14th of June 2010 10:41:07 PM

-- Edited by Sue T on Monday 14th of June 2010 10:43:27 PM

-- Edited by Sue T on Monday 14th of June 2010 10:44:08 PM

Rhianrach · Expert

Awesome thanks had a diddle around and can see how it all works.
It's not something you would want to do a lot of is it. smile

Ican imagine it can become a bit of a nightmare keeping track if you did a lot of them.

Sue T · Veteran Member

To make it easy I set them up as recurring entries in Sage.

Sue

Rhianrach · Expert

Sue T wrote:

To make it easy I set them up as recurring entries in Sage.

Sue

When the bill finally comes in and everything has been reversed (sage does this immediately after the final month end has been run I've found out which is nice) and you enter the invoice in june wont it just show junes electricity expenses as £300, so you would have your monthly reports showing an expense of £100 for march,april and may then £300 in june ? or do you split the invoice between march april and may?

This is the only bit I don't get because when yo run junes monthend it will show £300 plus any accrual for that month which would be wrong wouldn't it?

Sue T · Veteran Member

Hi Steve

Sorry I am not sure what you are getting at but what you are doing is accumulating the estimated expense on a monthly basis just for monthly or end of year management reports, once the real bill comes in and is posted it makes the accounts accurate and takes the place of the estimated accural, by reversing the accurals journals total in month 3 ie.£300 it puts the expense account for electricity for example back to nil so you can post the accurate real bill. You could if you wanted wait for the real bill to come in divide it by the number of months and post accurate accurals but there seems little point as you have probably run months 1 & 2 management reports by then. If a bill for electricity for example covers two different accounting years you would post the amount accumulated at year end as an accural and reverse it in the new accounting year.
Hope this makes sense. This is a prime example where bookkeeping and accountancy crossover!

Sue

-- Edited by Sue T on Tuesday 15th of June 2010 12:17:37 PM

-- Edited by Sue T on Tuesday 15th of June 2010 12:19:58 PM

-- Edited by Sue T on Tuesday 15th of June 2010 12:21:51 PM

Rhianrach · Expert

It all makes sense, it just seems that although you are creating more accurate monthly figures which is fine, you are then overstating one month by entering an invoice for an expense that should cover 3 months in that one month so in this example June would show an expense of £300 when it should of been spread over the previous three months or is this as you say something for the accountant to sort out?

attilabenko · Guru

Do you not by then prepared you monthly managment reports so they are not going to be overstated?

Rhianrach · Expert

I'm beginning to feel stupid. smile

I get that that in this example that the previous three months have been prepared with the correct amount of expenses showing in th electricity account, but what about the 4th month when the actual invoice goes through, that will show £300 more than it should as the invoice is for the previous 3 months.

The only thing I think I'm not getting is what reports do you use for monthly management?

attilabenko · Guru

Ok let's try...i am not sure if I am getting it either. Do it with just one month December. You estimate your electricity for Dec. £100 but they invoice you in January..
entries:
end of dec.
journal:
dr electricity £100
cr accruals £100

first of jan.
journal:
dr accruals £100
cr electricity £100

so you have a cr balance of £100 on your electricity a/c, now the invoice comes and you pay

dr electricity £100
cr bank £100

so on your electricity a/c you have nothing...
and on your reports the numbers will be right in terms of liabilities,etc.

did i get it right?

so your electricity a/c entries in january would be:
cr
1 jan journal 100

dr
x jan bank 100

-- Edited by attilabenko on Tuesday 15th of June 2010 08:53:52 PM

Rhianrach · Expert

attilabenko wrote:

Ok let's try...i am not sure if I am getting it either. Do it with just one month December. You estimate your electricity for Dec. £100 but they invoice you in January..
entries:
end of dec.
journal:
dr electricity £100
cr accruals £100

first of jan.
journal:
dr accruals £100
cr electricity £100

All of this I get, I can see how that works.

so you have a cr balance of £100 on your electricity a/c, now the invoice comes and you pay.
I think this is where I fall down as you don't appear to have any balance on either at this point as everything is reversed leaving a zero balance.

dr electricity £100
cr bank £100

so on your electricity a/c you have nothing...
and on your reports the numbers will be right in terms of liabilities,etc.

did i get it right?

You end up with a debit of £100 in your electricity which I think is right but if you were to run a report at the end of the month it would be overstating Jan by £100 I think.

so your electricity a/c entries in january would be:
cr
1 jan journal 100

dr
x jan bank 100

-- Edited by attilabenko on Tuesday 15th of June 2010 08:53:52 PM

So I'm thinking maybe this is something that is taken into account somewhere.

Thanks for your help it's appreciated, accruals just seem dumb evileye

attilabenko · Guru

Hi Steve,

Ok let's try...i am not sure if I am getting it either. Do it with just one month December. You estimate your electricity for Dec. £100 but they invoice you in January..
entries:
end of dec.
journal:
dr electricity £100
cr accruals £100

first of jan.
journal:
dr accruals £100
cr electricity £100

All of this I get, I can see how that works.

so you have a cr balance of £100 on your electricity a/c, now the invoice comes and you pay.

I think this is where I fall down as you don't appear to have any balance on either at this point as everything is reversed leaving a zero balance.

At the end of period your electricity balance should be transferred to profit and loss so when you reverse the accrued expense you would have cr balance of £100? Am I right in thinking that? You see I did learn this but after passing the exam I never had yo use it .

Rhianrach · Expert

My head has turned to mush biggrin

attilabenko · Guru

I know same here...it would be so good if someone would join us who could actually tell us the answer for sure...I do think you have to transfer the balance to p&l, in sage you should have something called manage month end if you click on it should give you the option transfer balances to p&l. I will get my good old study books out later to check.

Rhianrach · Expert

Will look forward to it cheers Attila.

The only way I can see it working is if once you get your invoice you apply it to the dates that you applied the accruals to so,

Invoice in march for £200 for service used in january and february

When inputting put £100 through dated january and £100 through dated february but then your tax point is wrong.

I will look forward to what yout textbooks say as when you do it in sage you end up with £200 going through in march so if you do a monthly profit and loss you have £100 showing in months jan and feb then £200 in march although if you do a yearly profit and loss it shows just £200 like it should, and then my brain melted. wink

semsley · Guru

Don't know whether this will help or just muddy the waters further but here goes -

You've estimated the bill for Jan and Feb at £100 per month so in Feb it would show in accruals as 200.

In March you get the bill for say 350 which you post with detail saying something like Jan - Mar.

You reverse your accruals and the actual bill amount then shows in the P&L because come March you don't have anything to accrue for.

Rhianrach · Expert

semsley wrote:

Don't know whether this will help or just muddy the waters further but here goes -

You've estimated the bill for Jan and Feb at £100 per month so in Feb it would show in accruals as 200.

In March you get the bill for say 350 which you post with detail saying something like Jan - Mar.

You reverse your accruals and the actual bill amount then shows in the P&L because come March you don't have anything to accrue for.

Yeah thats exactly what I get, what I dont get is say you run a P+L every month, for jan and feb it will show the £100 as an expense which is what it seems the point is and that is fine, but after running through it in sage the accrual gets reversed at the end of feb which is fine, and I put the invoice through in march for jan and feb services but then the P+L in march shows a £200 expense that should of been for jan + feb. So the monthly P+L are fine for jan and feb as they show the expense, and the yearly P+L is fine as it will show the correct expense however marchs monthly P+L will show £200, Is this right, is this what should be showing or have I got something wrong somewhere, do I need to offset that £200 in march somehow or is it acceptable to show this figure in march?

semsley · Guru

Say the March bill is for use of elec for Dec, Jan, Feb then that bill should be there and there should also be an accrual for March of the 100. Because for it to be a true and fair reflection of the position of the company you need to accrue for the use for March. The Dec/Jan/Feb accruals should be reversed.

TBH I very rarely use accruals and prepayment (I do teach them though) because only a company wants monthly management accounts prepared there is no need to use them except at the year end when you prepare a list for the accountant.

-- Edited by semsley on Wednesday 16th of June 2010 11:21:13 AM

Rhianrach · Expert

semsley wrote:

Say the March bill is for use of elec for Dec, Jan, Feb then that bill should be there

TBH I very rarely use accruals and prepayment (I do teach them though) because only a company wants monthly management accounts prepared there is no need to use them except at the year end when you prepare a list for the accountant.

-- Edited by semsley on Wednesday 16th of June 2010 11:21:13 AM

Where ? in march?

The company I will be working for want monthly reports so I thought it best to have a tad of an idea about them.

Thanks for your help so far. biggrin

semsley · Guru

Where ? in march ?

OK

If you have been accruing for say electricity at £100 a month because you estimate that's the usage. In Dec you would have £100 accrued , in Jan £200 accrued in Feb £300 accrued.

You get the invoice from the electric company in March which covers Dec to February actual usage. You post this to the supplier and nominal electricity.

You reverse the accrual of £300 because you now have the correct figure for that period. But you still need to accrue £100 for the estimated March usage.

Rhianrach · Expert

semsley wrote:

Where ? in march ?

OK

If you have been accruing for say electricity at £100 a month because you estimate that's the usage. In Dec you would have £100 accrued , in Jan £200 accrued in Feb £300 accrued.

You get the invoice from the electric company in March which covers Dec to February actual usage. You post this to the supplier and nominal electricity.

You reverse the accrual of £300 because you now have the correct figure for that period. But you still need to accrue £100 for the estimated March usage.

Yep I get that and thats what I've done but if you get an invoice in march and post the invoice as per date/taxpoint in march you get £300 showing in march on your P+L and my question is, is this right.
If I run a P+L for march it will show £300 electric in march regardless of the accruals that were there and have now been reversed, this is what I'm on about, I understand accruals to the point of showing usage in certain months and I get that over the course of a year it will be right but if I produce a monthly report for march it will show £300 because I have posted the invoice to that month, so am I missing something, should I be posting that invoice to the previous months or is it aceptable to post it in that particular month even though it will then show as an overstated amount for that month?

I'm maybe over-analysing this but it does seem to overstate the month of march.

If I run a monthly P+L for jan then it will show £100 same for feb same for dec but when I post the invoice with the correct date/taxpoint it will show up in march's P+L as £300 then when you add the accrual to this month for an invoice that is due in june its £400, so what am I missing here, I'm tearing my hair out here because I may be the only person on the planet that can see this, the figures for the month that the invoice comes in will be overstated unless you dont do the reversal and post the invoice to the accruals.

confuse

semsley · Guru

You should post the invoice with the correct date/tax point. Yes it will show as £300 in March and you should also have an accrual for £100. The YTD figure should show as £400, I think.

I get what you mean now each month you show £100 and that's what you want to show, however, it is unlikely that March would be exactly £300 it would be whatever the total usage was, could be say 375. You'd like this to show as £175 in the month wouldn't you, with £100 in accruals? Whereas it will show as £375 in the month and £100 in accruals with a correct YTD figure.

Surely, it's the YTD figure that the company owners will be interested in anyway.

Rhianrach · Expert

semsley wrote:

You should post the invoice with the correct date/tax point. Yes it will show as £300 in March and you should also have an accrual for £100. The YTD figure should show as £400, I think.

I get what you mean now each month you show £100 and that's what you want to show, however, it is unlikely that March would be exactly £300 it would be whatever the total usage was, could be say 375. You'd like this to show as £175 in the month wouldn't you, with £100 in accruals? Whereas it will show as £375 in the month and £100 in accruals with a correct YTD figure.

Surely, it's the YTD figure that the company owners will be interested in anyway.

Aahhhhh I think I want to marry you, (in a plutonic way of course) you have now answered my question.
I was assuming that when you ran monthly reports you would run only the month in question whereas I think you mean you need to run monthly reports from the beginning of the financial year to the month in question in which case the figures would be correct, please tell me thats what you meant.

semsley · Guru

That's what I meant. Presume that's platonic.

Mum biggrin

-- Edited by semsley on Wednesday 16th of June 2010 05:13:20 PM

Rhianrach · Expert

semsley wrote:

That's what I meant. Presume that's platonic.

Mum

-- Edited by semsley on Wednesday 16th of June 2010 05:13:20 PM

in that case I'm happy, as the only way to be accurate if you run specific months is to not reverse the accrual and post the invoice to the accrual account.

Thanks for your answers,

Son biggrin

Susie Sue · Senior Member

HOOOOOORAY!!! haha

semsley · Guru

Rhianrach wrote:

semsley wrote:

That's what I meant. Presume that's platonic.

Mum

-- Edited by semsley on Wednesday 16th of June 2010 05:13:20 PM

in that case I'm happy, as the only way to be accurate if you run specific months is to not reverse the accrual and post the invoice to the accrual account.

Thanks for your answers,

Son

It is, if that's what you want, but it is not general practice.

Rhianrach · Expert

Awesome thanks. smile

Sue T · Veteran Member

Hi sorry to join in the but if you don't reverse the accural your profit and loss will be wrong for the month and you will have an accural figure ongoing and incorrect expenses as the YTD figures are made up from the accumulation of the monthly P&L figures on Sage.
This is how your figures would show if you do it correctly say on a £300 estimated telephone bill on your monthly profit and loss account:-

Jan P&L £100 expense (debit telephone nominal)
Feb P&L £100 expense ditto
Mar P&L £100 expense ditto

So you now have £300 debited to telephone expenses accrued over 3 months.
Actual bill comes in dated 1st April for £375 , which must be posted at the correct date so you credit back telephone nominal exps accrued for £300 by reversing accurals and posting back at March 31 (remember this was only done for management accounting reports to give an indication of monthly expenses) and then posting the telephone bill correct, which will give you a correct expense in April of £375 telephone expense which effectively on your P&L is correct(as the expense is paid in April). If you don't reverse you would have £675 debited as a telephone expense on your YTD P&L at April. If you post a bank payment/invoice to the accural account it will not make your P&L correct as accural nominal code is not part of P&L reports.

Sue

-- Edited by Sue T on Wednesday 16th of June 2010 11:03:17 PM

-- Edited by Sue T on Wednesday 16th of June 2010 11:04:18 PM

-- Edited by Sue T on Wednesday 16th of June 2010 11:05:28 PM

-- Edited by Sue T on Wednesday 16th of June 2010 11:11:18 PM

-- Edited by Sue T on Wednesday 16th of June 2010 11:16:00 PM

Sue T · Veteran Member

Sorry for alterations above but I kept thinking of different ways to explain it.

Sue

attilabenko · Guru

you do not reverse the p&l, what is there stays there. reverse accrual so you have cr 300 on phone a/c then you pay 300 so you have nothing on your account. phone already has been posted to p&l 100 in each previous month so expenses ok there.no balance left here so nothing to transfer to p&l in this month quasi no expenses.don't want to go into what if the estimate of accrual wasn't good.
am i getting it or is there something wrong in the above?

attilabenko · Guru

end of each month when accrue entries on the phone a/c should be dr journal(accrual) 100 and cr transfer to p&l 100 so at the end of each month would have no balance left either as it was transfered to p&l just like year end.am i right?

-- Edited by attilabenko on Thursday 17th of June 2010 12:01:51 AM

Sue T · Veteran Member

Not sure - you are effectively showing £100 is a guessitmate of a monthly expense in your P & L report by lets say "borrowing the money" from the tel a/c and putting into an accural a/c.,a nominal account which doesn't have any effect on the P&L account. At the end of the guesstimate period you want to "pay back" the money so that your balance is at nil on your phone account otherwise you would be showing the guessitmate expense still in your tel account and therefore by default in the P&L and you do this by reversing the entry, ready for the "real bill" which you then pay from the phone account and which is the true correct figure in your P&L:

You will have 3 debits for £100 (3x£100 + £300)on the telephone exp a/c (1 each month, so each individual months P&L will show a telephone exp of £100) then you will have a credit of £300 when you reverse the accural (you reverse as a whole amount for the 3 months not individually) which will "wipe out" all 3 entries on the telephone bill expense a/c, so that P&L then be at nil in month 4 until the "real bill" comes in and shows the correct amount in the telephone expense account and therefore the P&L for month 4.

You are not posting anything to P&L nominal code 3200 (in Sage) the telephone bill entries appear in the P&L by default because they are an expense. Only the nominal codes in Sage from 4000 appear in your end or year P&L not the 2000 range so the actual entries to the accural a/c which isnt in the 2000 nom code range does not affect the P&L.

Sue

-- Edited by Sue T on Thursday 17th of June 2010 06:57:09 AM

-- Edited by Sue T on Thursday 17th of June 2010 07:04:39 AM

-- Edited by Sue T on Thursday 17th of June 2010 07:06:17 AM

Sue T · Veteran Member

Just to complicate matters a little further an accurals nominal account should show the amount outstanding for any expenses ccrued but not paid in full at the end of a period, ie: at the end of year. This would then show on the Balance sheet for end of year accounts.

Sue

-- Edited by Sue T on Thursday 17th of June 2010 07:37:08 AM

Rhianrach · Expert

Awesome it all makes sense now, my problem was understanding what needs to be seen in the management reports, it still means that every 3 months or so you would have a report showing a much greater value for that particular expense as the real invoice will have been posted to that month.

Sue T · Veteran Member

Well effectively you may have a greater expense because the "real bill" may be more or it could be less so then it would be a lesser expense. The point is that that the reversal of journals will put the P&L back to nil in the 4th month to allow for the correct amount to be posted as an expense and therefore correct in the accounts. I would run my P&L monthly report in month 3 showing the £100guesstimate expense for month 3 and post the reversal journal as one amount for the accumulated accural amount after you have run the report at month end.

Sue

-- Edited by Sue T on Thursday 17th of June 2010 09:05:40 AM

-- Edited by Sue T on Thursday 17th of June 2010 09:07:14 AM

-- Edited by Sue T on Thursday 17th of June 2010 09:12:08 AM

Rhianrach · Expert

Thats pretty much what sage does it posts the final accrual when you run the month end then reverses it straight after so your accrual balance is zero and your expense a/c has the accrued amount taken off so you are then ready for the invoice.

It still leaves april if you ran a report specifically for that month rather than ytd with a large expense but as selmsley pointed out I would be running ytd rather than a specific month.

It's enough to send you insane sometimes. biggrin

attilabenko · Guru

you see that,s what i am not getting either as when you do year end this does not happen. that's why i am keep thinking about transfering balances to the actual p&l account as you would do at year end (sage does it for you but it doesn't do it at month end). just because you run a p&l report in sage it does not mean those balances has been transfered - you can run as many p&l reports as you want without any effect in your accounts. in my opinion unless you close a period in some way you not going to get precise numbers in the following periods. i do something similar at work with monthly stock periods on a software called fourth hospitality doing purchase ledger but i have got not much to do with reports from the nominal ledger. when you transfer the balance from your whatever electricity account to p&l account it would mean no balance left there and in the next period when you reverse it and make a payment those would cancel each other so no balance here.(that is in a manual scenario - i only can think in pen and paper now, unless i understand what is happening i can't use the software i just have to know what is what and why..). So in the new period you would not have double /triple whatever expense. The expense was posted before and included and transfered to p&l as it was relating to another period. You make the payment now the only balance you get from this is your bank as the actual payment relates to this period.
Sue, doing accruals does effect your p&l, expenses are included in it but but your accruals account is not. It is included as you said in the balance sheet.
You do this because all income and expenses recognised in a period must be included in P&L (income statement). I think about it in terms of double entry as i post the expense as i would normally and the other side of the entry what would be the payment is the accrual. So in the month following the closed period your expenses would be different only if your estimate was not right and the difference would be only the difference between your estimate and the actual invoice.
I did get my text book out and it only say about end of year accruals and prepayments and i am only thinking on this line. The book is actually useless 2 and a half pages about this, one page is an example for prepayment,the other page is an example of accrued expense and the half a page is they are going on about it how important it is to get this right...but no explanation
I do understand these in term of end of year,it is fairly straightforward but these monthly managment reports confused me more than ever...

semsley · Guru

Accruals and prepayments are balance sheet items - they are part of current assets and current liabilities. The corresponding entries in them on the expense items are part of the P & L statement but are not posted to the P&L account because they are reversed each month after the figures have been taken for the management accounts.

Rhianrach · Expert

Hi Attila,

It's a lovely subject, I get how it works now and I see the purpose but I still believe it's a bit hit and miss as a method of accurately showing service usage over the months.
The way I see it is if you have £300 spread over 3 months, in month 4 if you still have a credit of £300 in the accruals a/c and you still have £300 in your expense a/c which will show in your profit and loss, why not just post the invoice when you get it in month 4 to accruals so cr bank, dr accruals this will then leave the correct amount showing in the 3 months, it will leave a zero balance in month 4 ready for £100 to be accrued to the expense the bank will be right and accruals will be at zero. This means that whether you run a report ytd or for a specific month you will always have the correct figure and the invoice will have the correct date without showing a full amount in month 4.

Obviously there is something out there that stops this from being correct and thats where I fall down as I don't have enough knowledge to see all the pitfalls.

I shall stick to doing it the way everyone does as this is accepted, and run reports ytd unless asked to do otherwise. wink

And theres my explaination thanks Selmsley. biggrin

-- Edited by Rhianrach on Thursday 17th of June 2010 09:58:07 AM

attilabenko · Guru

I see but than as you said before your reports going to be only ytd correct but not monthly unless you get your previous reports out and adjust the new one going through everything? Is that right?
I should get it, what's wrong with me nowdays??? Next modul of my studies is managment information I should be able to get the basics....I shall have a cup of coffee now.
And I never will teach accounts. I feel for those tutors in distance learning (the ones who actually give support) their job must be really difficult...

Rhianrach · Expert

In sage you have an option to run reports from whatever date to whenever involving whatever transactions and so forth and so on, in reality I should stick to knowing how to show accruals and not worry about the reports till like yourself I've actually covered them next year as I haven't got a clue what they might want and what info they will glean from them, I'm trying to pre-empt when I shouldn't. biggrin

I agree that teaching accounting must be a pain in the doodah, especially at foundation level when you don't understand debits and credits.

semsley · Guru

Yes it's easier to teach face to face as you can explain and show examples. This is much more difficult using email.

Lou Brown · Newbie

Hi everyone. I am glad I found this topic, I hope you bright people can help me with this.

I have been using Sage for less than a year and my boss is asking me to produce monthly P&L reports. I have not been trained with regards accruals yet but I do understand the concept. Funny enough I struggle to put it into practice

I have been advised to export the P&L to Excel and do the manual accrual adjustments for now until someone teaches me how to use this function properly, as I do not do an month end procedure ATM, our off site accountant does every 6 months. We are a small business btw. Please see below an example of my problem :
Sales for the month : 100K Year to date Sales: 700k
Now, from that 100k there is 20k which relates to prior period, therefore I have reversed the accrual by taking 20k off the 100.
I also know that in the current month we have undertaken work valued at 50 K which have not been invoiced yet. Please note we submit application to client don't actually invoice until receive the money. So I have added to month revenue 50k as accrued revenue. My questions are:
1. Because its manual adj in excel when I reverse an accrual do I reverse it in the period only or in the year to date too? Period and year to add are from the P&L statement.
2. When I add an accrual do I adjust the period only or the year to date too?
3. Let's say from the 50 K of accrued revenue, the client pays 35 in the following month hence I invoice them when money hit the bank for vat purposes etc. if I understood correctly, I will have to reverse de 35 so I don't double count it but what'd do I do with the remainder if 15k which relates to current period but will be paid/ invoiced in say 3 months?

I would appreciate your input on this, I am very confused. All the best!