TurboCASH Accounting Software TurboCASH United Kingdom
Select your Country
OPEN SOURCE ACCOUNTING SOFTWARE
HomeFeatures & ScreenshotsShop onlineCompareFAQForumRegisterContact
Community
Free Downloads
Shop
Other Titles

Using TurboCASH

 







ADJUSTMENTS
ACCRUED / OUTSTANDING INCOME
  
This is income or a part of income, which is receivable during a financial period, but is not yet received as at the end of a financial year. The income account must be adjusted to reflect the income that should have been received for 12 consecutive months or accounting periods or reporting dates. The amount by which the income account is outstanding will increase the amount of the income at the end of the financial year. At the end of the financial year a current asset is created - Accrued income, because the amount of the income is owed to the business.

To Identify, Enter the Transaction and to Post the Transaction to the Ledger:

Identify the account and calculate the income, which is not yet received and recorded during this financial year. For example, after analysing the pre-adjustment trial balance, it is discovered that the interest income is reflected as R() 2 500. This interest represents the interest that has been received on a fixed deposit for the months of March to December. The bank will credit the interest for the two months, January and February during March. The interest on the fixed deposit is calculated at 10% per annum and an amount of R() 3 000 interest should have been received for the year.

 

Interest was already received to the amount of R() 2 500. The income account reflects interest received for 10 months as at the end of the financial year. But as 2 months interest will be received in the new financial year in respect of the current financial year, it is a current asset.

The interest receivable for 2 months must be recorded to reflect the correct income for the financial year. To have the correct income reflected in the financial statements, the interest not yet received for the current period must be recorded in the income account and transferred to the accrued income account.

Enter the transaction in the General Journal. Press the key on your keyboard or click on the speed button or icon. The Batch Type selection screen will be displayed.

Select the General journal Batch Type and click on the button. The General journal Batch Entry screen will be displayed. If the correct contra account for the batch was not displayed on the Batch Type selection screen, press the key on your keyboard or click on the speed button or icon to set the options for this batch. Note that it is recommended that the Amount Entry field be set to allow both (debit and credit).

Enter the transaction in the batch. After entering the transactions in the general journal, the transactions is as follows:

Minimise button - inactive. Restore button - click to display this screen to full size and click again to restore it to its original size. Title bar - double-click to display the screen in full size or to return to the normal size. Title bar. The name of the selected batch. Title bar. The Alias for the selected batch. Close button - Click to close or exit this screen. Click to delete a selected transaction. Click to insert a row or line above a selected transaction. Click to balance the batch, if the batch is not already in balance. Click to post or update the transactions to the ledger, if the batch is in balance. Click to enter transactions Inclusive or Exclusive of VAT. Click to list the entries or transactions entered into the batch. Click to access more processing options for the batch. Click to set the Options for this batch. Enter the reference number for the transaction. Enter or select the date of the transaction. Enter a description for the transaction. Select the Accrued or Outstanding Income (Current Assets) account for the debit transaction and select the Income account for the credit transaction. Enter the debit amount for the Accrued or Outstanding Income (Current Assets). Enter credit amount for the Income account. Scroll bar - scroll to view more transactions entered in the batch.

Click on the speed button or icon or press the key on your keyboard. Select the change the alias option.

Click on the speed button or icon or press the key on your keyboard to post the transactions to the ledger. After posting the transactions to the ledger, the entries should reflect as follows in the ledger.



The income accounts will result that the net profit be increased with the income of R() 500, which is not yet received as at the end of the financial year (28/29 February). It has also increased the current assets, as it is an income, which will be received for the new financial year.

An income of R() 3 000 will be recognised as income and not R() 2 500. It has affected the profit in the previous financial year, but will have no effect on the profit in the new financial year.


Once these transactions have been processed and you have done the Year-end process in the Tools - Global Processes - Do Year-end menu option, you need to reverse these adjustments in the new financial year. The reason for this is that these adjustments have served its purpose in the old financial year to assist you to generate the correct final financial statements.