Example of an Accrual situation and approach

Accrue for an employee bonus to paid at the end of the financial year.

Record an amount each month to an expense account and build up a balance in the Accrual and Deferred Income Account as a potential liability (owed) to the employee. That balance is then used to eventually make a payment to the employee.

  1. Decide on the amount that needs to be accrued each month
  2. Create a Journal for the first month with a debit to a suitable expense account and a credit to Accrual and Deferred Income Account
  3. Navigate to the the journal and from the Action Box select Memorise and Schedule
  4. On the memorised Transaction screen, tick Auto Schedule, select the frequency and the next date to post the Journal
  5. The system will record the journals for the No. Remaining
  6. At the end of the period an amount has been accrued each month so that a balance is available on the Accrual and Deferred Income Account to satisfy a payment