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jbaker-waverleya
November 26, 2021
Question

expense accruals

  • November 26, 2021
  • 1 reply
  • 0 views

Hello

We are new to QB and we are using the accrual method in our books. My question becomes when entering invoices should they be entered with the order date , invoiced date or paid date to meet the accrual? we have several vendors that split the billing across months so orders placed between 15th to the 30th are paid the next month on the 10th. in this case I believe we would use the invoice date as the bill date and this would create the accrual in the correct month.

1 reply

R
Rochelley
November 26, 2021

Hello @jbaker-waverleya ,

 

The invoice date is the date that should be used.  This assumes that if goods are involved, they have been shipped prior to or on the day of the invoice date.  The same is true in the case of services; the vendor should only create the invoice once the services have been completed.  This is the date that deems you are now the "owner" of the goods or services being billed.

 

In accrual accounting, that bill becomes due and payable on the date of the invoice and the expense is recorded in the period in which the invoice date occurs; this is even though you may not pay that bill until the following month, or whatever terms have been agreed upon with your vendor.  When you enter the bill into QB, the amount is posted to the expense account you choose, but it also creates an accounts payable entry for that vendor.  It is that accounts payable account that will be reduced when you use the Bill Payment feature in QB.

 

Good luck!

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