What adjustments should I make (reverse) early in the new financial year?

This article is for churches and charities that account on an accruals basis.

In the new financial year, you need to reverse adjustments made in the prior financial year such as:

  • Accounts Receivable (money owed)
  • Accounts Payable (money you owe)
  • Prepayments (money paid in advance)
  • Deferred Income (money received in advance)

You need to reverse these when the corresponding transaction actually takes place or becomes due.

For example:

  • On 31/12/2023 you accounted for £2,500 of Income tax recovered for Q4 of the 2023 financial year by making an accounts receivable adjustment. This £2,500 was received into your accounts on 15/01/2021. The accounts receivable adjustment now needs to be reversed out, so that this income isn't double-counted.
  • On 31/12/2023 you accounted for £950 of HMRC PAYE and NI contributions, relating to staff employed in December 2023 by making an accounts payable adjustment. This was actually paid on 09/01/2021. This accounts payable adjustment now needs to be reversed out, so that this expenditure isn't double-counted.

You can choose to reverse these adjustments on day 1 of the new financial year, or on the actual date that the transaction takes place, according to your preference.

The reversal will adjust the category total of the income or expenditure category affected. Within the Creditors and Debtors table on the Adjustment screen, you can review all the adjustments.

Select the appropriate type from the drop-down list.

Any adjustment requiring reversal has a 'Reversal' (two-way arrow) button to the right of the adjustment.

If you use the detailed dashboard view as opposed to the process flow, view the number of outstanding adjustments is recorded in the Overview tab. 

To help you better understand the Adjustments module as a whole, please visit the module overview page here.

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