Hi, I work for a non VAT registerd company therefore there are no quarterly VAT returns. Do you still need to apply preapyments and accruals if so when. Do you do it at the end of the financial year or every month.
Even for the smallest of businesses I would make prepayment and accrual adjustments. Timing of these really depends on the business size and the type of information they need. Most of the businesses I work with would I would only do these on an annual basis. It gives a fairer representation of expenditure for the period.
prepayments and accruals are part of applying accounting principles and do not depend on VAT registration. So the answer is yes, you need to account for them. The timing depends on how you produce management accounts for the clients. I normally produce a monthly P/L and balance sheet for my clients so I apply prepayments and accruals on a monthly basis. It is more laborious than doing them an an annual basis because you require entries every month, but it makes the management accounts more accurate for the client.
Hope it helps.
Fabs
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Thank you so much guys, its greatly appreciated. Currently we do not produce monthly management accounts, so i guess i will be doing the prepayments and accruals yearly.
