Example of an Accrued Income situation and approach

Services for say waste collection have been provided for three months in advance. The sales invoice is only sent at the end of those three months.

Record an invoice to the Prepayment and Accrued Income Account as a Current Debtor (amount due) dated at the point in the future when it will be issued to the customer. The income is recognised as it was delivered during the previous months.

For Organisations that are NOT VAT registered or operating the Standard VAT scheme

  1. Edit or Add a Sales Item for the service being provided; selecting the Prepayment and Accrued Income Account found as a Current Asset-Debtor
  2. Create a Sales Invoice, as usual, for the above Sales Item and covering the three months and dating it in the future when the invoice will be sent to the customer.
  3. Navigate to the the Sales Invoice and from the Action Box select Add Prepayment Schedule
  4. On the Prepayment Schedule screen, select the Charged to Account to record the monthly sales income to, the start date (when the service is first delivered), the Count and the interval for posting the Journal
  5. Click SUBMIT to create the schedule, the screen then displays the details. Any journals dated in history (prior to today's date) are posted and shown greyed out
  6. The system will record the journals for the No. Remaining
  7. Receive payments from the Customer in the usual way allocating to the Sales Invoice.
  8. At the end of the period an amount has been recorded as a sale in each month so that a balance on the Prepayment and Accrued Income Account is zero

Note the sales invoice DOES NOT conform to being an Advanced Invoice.

For Organisations that operating the Cash Accounting VAT scheme

  1. Edit or Add a Sales Item for the service being provided; selecting the Prepayment and Accrued Income Account found as a Current Asset-Debtor
  2. Create a Sales Invoice, as usual, for the above Sales Item and covering the three months and dating it in the future when the invoice will be sent to the customer.
  3. Navigate to the the Sales Invoice and from the Action Box select Add Prepayment Schedule
  4. On the Prepayment Schedule screen, select the Charged to Account to record the monthly sales income to, the start date (when the service is first delivered), the Count and the interval for posting the Journal
  5. Click SUBMIT to create the schedule, the screen then displays the details. Any journals dated in history (prior to today's date) are posted and shown greyed out
  6. The system will record the journals for the No. Remaining
  7. Receive payments from the Customer in the usual way allocating to the Sales Invoice. VAT will be recorded on the VAT Return for each allocated receipt.
  8. At the end of the period an amount has been recorded as a sale in each month so that a balance on the Prepayment and Accrued Income Account is zero

Note the sales invoice DOES NOT conform to being an Advanced Invoice.