Example of a Prepayment situation

A bill has been received to cover a service being provided for the next six months such as regular waste collections.

Record the initial bill to the Prepayments and Accrued Income Account as an asset (amount due) until each monthly service has been supplied and then recognise the expense for that month.

  1. Enter the Bill (or Payment document) with the appropriate VAT rate (If VAT Registered) for the service, select the Prepayments and Accrued Income Account found as a Current Assets - Debtor
  2. Navigate to the the Bill (or payment document)and from the Action Menu select Add Prepayment Schedule
  3. On the Prepayment Schedule screen, select the Charged to Account to record the monthly expense to, the start date, the Count and the interval for posting the Journal
  4. 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
  5. The system will record the journals for the No. Remaining
  6. Whether a bill or a payment document the VAT is recorded immediately
  7. At the end of the period an amount has been recorded as an expenses in each month so that a balance on the Prepayments and Accrued Income Account is zero