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ADJUSTMENTS
PROVISION FOR ACCRUED / OUTSTANDING EXPENSES
  
Should it happen that the amount of a specific expense incurred couldn't be determined exactly at the end of a financial period or financial year, provision is made for the expenses in the accounts. This provision for future expenses works on the same principles as that of accrued or outstanding expenses. The expense is recorded before the payment is made. It will decrease the profit for the financial year, but a liability will be created which will be paid in the next financial year.

To Identify, Enter the Transaction and to Post the Transaction to the Ledger:
For example, the pre-adjustment trial balance reflects no amounts for expenses for repairs on motor vehicles. On 26 February, the delivery van gives mechanical problems and is taken to the garage. It is estimated that the repairs to the delivery van will be approximately R() 2 000. It will take approximately 3 weeks to repair the vehicle.
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 Expense account for the debit transaction and select the Provision for Expenses (Current Liabilities) account for the credit transaction. Enter the debit amount for the Expenses account. Enter credit amount for the Provision for Expenses (Current Liabilities). 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 amount that should have been paid for the financial year is the amount on the pre-adjustment trail balance, if any plus the amount of the provision for future expenses. The expenses are increased (debited) and current liabilities are increased (credited).

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.