Configure and apply accrual schemes

  • 9 minutes

Accrual schemes are used to set up the deferred revenue and costs, and the same accrual scheme can be used for both revenue and costs. Ledger accruals redistribute the revenue or costs of a journal line so that the revenue and costs are recognized in the appropriate periods.

On the page, you need to specify the debit and credit accounts that are used when the accrual scheme is applied.

General ledger > Journal setup > Accrual schemes.

Screenshot of the Accrual schemes page.

  • Debit – The main account that you define replaces the debit main account on the journal voucher line. This account is also used for the reversal of the deferral, based on the ledger accrual transactions.
  • Credit – The main account that you define replaces the credit main account on the journal voucher line. This account is also used for the reversal of the deferral, based on the ledger accrual transactions.

After you determine which accounts to use, you can specify how the voucher number is created when accrual transactions are created. You can also specify how often the transactions occur, the number of times that the transactions are created, and when the transactions are posted. After the accrual scheme has been created, you can use it in some of the journals by using the Ledger accruals function.

The Spread month and quarter values field distributes the amounts for each period of the accrual scheme either equally by choosing Evenly or prorates the amounts per Number of days.

General ledger > Journal setup > Accrual scheme

Screenshot of the Accrual schemes page with the Spread month and quarter values field higlighted.

Ledger accruals

When you enter a journal, you can select Ledger accruals on the Functions menu. Then, when you select the accrual scheme, you'll see the base amount from the journal that is spread over the period, as determined by the accrual scheme. For example, if you pay an employee's insurance for the whole year in January, and the amount is 12,000 USD (U.S.Dollars), you need to recognize that expense each month.

General ledger > Journal entries > General journals > Select a journal

Screenshot of the Journal Voucher page with the Functions dropdown menu highlighted.

You can also specify whether the amount that is accrued is based on the account or the offset account. After you make your selections, select Transactions to create and view all the transactions that have been created based on the accrual scheme. If don’t select Transactions and instead select OK or Cancel, the accruals are not be created.

General ledger > Journal entries > General journals > Select a journal > Functions > Ledger accruals

Screenshot of the Ledger accruals page.

For example, if you spread the 12,000 USD in insurance expenses over the year, you'll see 1,000 USD for each month. After you post the journal, you can view the transactions by using the Voucher transactions inquiry page.

General ledger > Journal entries > General journals > Select a journal > Functions > Ledger accruals > Transactions

Screenshot of the Ledger accrual transactions page.

If an accrual scheme can't be applied (for example, when a sales order invoice or purchase order invoice is involved), you can credit the prepaid amount and debit the expense amount. You can then select Offset when you apply the accrual scheme.

Watch the following video to learn how to set up and use accruals in General ledger.