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FI Accurals

Accrued expenses are expenses incurred but not yet paid, such as interest, rent, salaries, and commissions. They are recorded by debiting the relevant expense account and crediting the applicable payable account. Accrued revenues are uncollected revenues from services performed, recorded by debiting an accounts receivable and crediting a revenue account. Prepaid expenses are payments made for benefits extending beyond the accounting period, like insurance and rent, recorded by debiting prepaid accounts and crediting cash. Prepaid income is cash received before services are rendered, recorded by debiting cash and crediting an income account.

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127 views4 pages

FI Accurals

Accrued expenses are expenses incurred but not yet paid, such as interest, rent, salaries, and commissions. They are recorded by debiting the relevant expense account and crediting the applicable payable account. Accrued revenues are uncollected revenues from services performed, recorded by debiting an accounts receivable and crediting a revenue account. Prepaid expenses are payments made for benefits extending beyond the accounting period, like insurance and rent, recorded by debiting prepaid accounts and crediting cash. Prepaid income is cash received before services are rendered, recorded by debiting cash and crediting an income account.

Uploaded by

shekar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ACCURAL/DEFFARLS:

ACCURELS :

1. Accrued Expenses

Accrued Expenses: Expenses incurred but not yet paid or recorded at the statement date are called
accrued expenses.

Ex: Interest incurred but not paid

Rent incurred but not yet paid

Salary incurred but not yet paid

Commission incurred but not yet paid

Salary Salary A/C Dr


To Salary Payable Account
Next Month Salary payable A/C Dr
To Bank Account
Rent Rent A/C Dr
To Rent Payable Account
Next Month Rent payable Account
To Bank Account
Commission Commission Account Dr
To Commission payable
Interest Interest A/C Dr
To Interest Payable A/C

SAP Process:

If Accrued expenses posted with purchase order:

Without GR and with only IR

Rent payable

IR Rent A/C Dr
To Rent Payable to Vendor A/C
Rent Payable to Vendor A/C Dr
To Bank Account

Commission Payable :

IR Commission A/C Dr
To Commission payable to Vendor A/C
Commission payable to Vendor A/C Dr
To Bank Account

Accrued Revenues :
Revenues for services performed but not yet recorded nor collected

Service revenue

Month end entry Revenue Receivable A/C Dr


To Revenue Account
Bank Account Dr
To Revenue Receivable A/C
PREPAID :

Prepaid Expenses :

When companies record payments of expenses that will benefit more than one
accounting period, they record an asset called prepaid expenses or prepayments

Examples :

1. Insurance
2. Rent
3. Advertising
4. Salary

Accounting Entry :

Insurance Prepaid insurance A/C Dr


TO Bank Account
Every Month Insurance A/C Dr
To Prepaid insurance
Rent Prepaid Rent A/C Dr
To Bank Account
Rent A/C Dr
To Prepaid Rent

.SAP PROCESS:

PO without GR and with IR

Prepaid Rent A/C Dr


To Vendor Account
Vendor A/C Dr
To Bank Account
Rent A/C Dr
To Prepaid Rent A/C
Prepaid income :
When companies receive cash before services are performed

Ex:

1. Advance salary received


2. Advance Rent received

Advance Salary
Bank Account Dr
To Advance Salary Account
Advance Salary Account Dr
To Salary Account

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