How to reverse out Opening Accounts Receivable Balances
What is an Accounts Receivable Accrual?
If you create accounts on an accruals basis, then at the end of the previous financial year, you will need to accrue for income that relates to that financial year but that was not received until the following financial year.
At year-end, these will be shown as part of the 'debtors' on your balance sheet. A typical example is an HMRC Gift Aid claim relating to your financial year that was not claimed/received into your bank account until the following financial year.
Note: only transactions of material value need to be accrued for in your prior year accounts. Typically, this would include items say with a value above £500 that 'land in the wrong financial year' on your bank statement. There is really no need to accrue for small amounts, and doing so will complicate your year-end unnecessarily. If you are unsure, you should ask your independent examiner about this.
How to enter Opening Accounts Receivable Balances
When setting up ExpensePlus, you will need to set up your opening fund balances. As part of one of these steps, you will be asked to allocate your opening accounts receivable balance to the different funds this relates to.
Don't worry if you don't have these figures just yet - you can set up your opening balances later. In the meantime, you can still record transactions that have/will be accrued at year-end and that are showing on your current financial year bank statements that you have uploaded - keep reading to find out how to do this.
How to enter a bank transaction as being an Opening Accounts Receivable Balance Reversal
To find out how to upload and reconcile bank transactions, be sure to watch the Bank Reconciliation Module Overview video.
As part of this process, on the match transactions screen, you can record incoming transactions as income, transfers, refunds, or one of the other transaction types.
When a transaction is an opening accounts receivable balance reversal, select this option from the dropdown list (see below). You will then be able to enter the fund it relates to; splitting the amount if needed against multiple funds.
Note: the fund(s) you select should reflect the fund(s) you recorded the accrual against in your prior financial year accounts.
How to make an adjustment where the amount paid in is different from the amount accrued?
If you are yet to close your prior year accounts and you realise that you've incorrectly accrued for income, then you may be able to simply correct for this in your prior year's accounts.
If your prior year accounts are already closed, then:
If you didn't accrue for an income that you should have accrued
You should simply record this as an income when bank matching transactions
If you wrongly accrued for income OR the payment due no longer needed to be paid
Then you will need to account for this within the adjustment screen
If you accrued for income, but the amount received was different from the amount accrued
You should record the payment as an opening balance reversal when bank matching transactions
AND THEN account for the difference within the adjustment screen
- If the amount received was less than the amount accrued, you should enter a positive reversal amount for the difference
- If the amount received was more than the amount accrued, you should enter a negative reversal amount for the difference