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    Accruals & Prepaid

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    meliana sari
    The document provides guidelines for properly recording accruals and prepaid expenses in accordance with the accrual basis of accounting. Key points include: 1) At month-end, departments record accruals for all goods and services received during the month that have not yet been invoiced or paid. 2) Prepaid expenses are expenses paid in advance that are amortized over the period of future benefit. Supporting documentation must be maintained for all accruals and prepaids. 3) Accruals and prepaids are reconciled monthly with appropriate journal entries to ensure expenses are properly matched to the period incurred.

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    Accruals & Prepaid

    Uploaded by

    meliana sari
    112 views20 pages
    The document provides guidelines for properly recording accruals and prepaid expenses in accordance with the accrual basis of accounting. Key points include: 1) At month-end, departments record accruals for all goods and services received during the month that have not yet been invoiced or paid. 2) Prepaid expenses are expenses paid in advance that are amortized over the period of future benefit. Supporting documentation must be maintained for all accruals and prepaids. 3) Accruals and prepaids are reconciled monthly with appropriate journal entries to ensure expenses are properly matched to the period incurred.

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    The document provides guidelines for properly recording accruals and prepaid expenses in accordance with the accrual basis of accounting. Key points include: 1) At month-end, departments record accruals for all goods and services received during the month that have not yet been invoiced or paid. 2) Prepaid expenses are expenses paid in advance that are amortized over the period of future benefit. Supporting documentation must be maintained for all accruals and prepaids. 3) Accruals and prepaids are reconciled monthly with appropriate journal entries to ensure expenses are properly matched to the period incurred.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    112 views20 pages

    Accruals & Prepaid

    Uploaded by

    meliana sari
    The document provides guidelines for properly recording accruals and prepaid expenses in accordance with the accrual basis of accounting. Key points include: 1) At month-end, departments record accruals for all goods and services received during the month that have not yet been invoiced or paid. 2) Prepaid expenses are expenses paid in advance that are amortized over the period of future benefit. Supporting documentation must be maintained for all accruals and prepaids. 3) Accruals and prepaids are reconciled monthly with appropriate journal entries to ensure expenses are properly matched to the period incurred.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
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    At a glance
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    The key takeaways are the definitions and procedures for accounting of accrual and prepaid expenses.

    Accrual expenses are expenses incurred in the current period but not paid until the next period, while prepaid expenses are expenses paid in the current period but incurred over multiple future periods.

    Some examples of accrual expenses include utilities, maintenance services, and waste removal where the service is received in the current month but payment is made in the next month.

    ACCRUAL & PREPAID

    SOP ACCRUAL & PREPAID (A&L-5)

    by : ade
    DEFINITION OF ACCRUE

    EXPENSES
    ACCRUAL PERIOD
    &
    BASIS OCCURED
    REVENUE

    EXPENSES & CASH


    CASH BASIS
    REVENUE RECEIPT/OUT
    EXAMPLE OF ACCRUE

    - GOOD & SERVICES RECEIVED BUT


    INVOICE NOT PROCESSED YET
    - ENERGY (LISTRIK, AIR, ABT)
    - TV (LINK NET)
    - PILLAR (ELEVATOR MAINTENANCE)
    - WASTE REMOVAL (UD PRASISTHA)
    PAY ON THE
    GET THE
    “ALL EXPENSES THAT OCCURRED ON NEXT MONTH
    SERVICE/ CURRENT MONTH BUT PAY ON THE
    ITEMS FIRST
    NEXT MONTH”
    DEFINISI PREPAID

    Prepaid expenses is expenses that has been paid for certain period in the future. It
    will be amortized over the period that the hotel receives the benefit of the
    expenditure.

    Paid the Amortized the


    Prepaid expenses for expenses
    certain period monthly
    EXAMPLE OF PREPAID

    - INSURANCE (WTW), 1 year


    - Sunfish, 6 months
    - Ultima (Opera & Micros), 1 year
    - Mood Media, 1 year

    “ALL EXPENSES THAT WE PAID FIRST


    FOR SPECIFIC PERIOD THEN WILL BE AMORTIZED
    THE EXPENSES
    PAY FIRST AMORTIZED MONTHLY UNTIL THE MONTHLY
    PERIOD IS OVER”
    LEVEL 1

    SOP ACCRUAL & PREPAID (A&L – 5)

    OBJECTIVES :

    To properly match period revenues with the expenses necessary to generate those
    revenues through the recording of accruals and prepaid expenses.

    PRIMARY RISK :

    - FRAUD
    - FINANCIAL REPORTING
    LEVEL 1

    SOP ACCRUAL & PREPAID (A&L – 5)

    POLICY :

    - At the end of each month, accruals are made for all goods and services
    that were received during the month but were not invoiced and/or paid
    and impact the P&L

    - All accrual and prepaid accounts are reconciled each month and have
    appropriate supporting documentation.
    PROCEDURE DETAIL:

    ACCRUAL PREPARATION :
    - At the end of each month, each Department Head informs Accounting of all
    outstanding invoices (Goods and Service Received but invoice has not been processed).
    Each department creates a checkbook or list to identify these items. The list contains
    of :
    1. Vendor Name
    2. Account Code
    3. Department Code
    4. Amount
    5. Invoice Date
    6. Invoice No

    The list should be completed


    by HOD’s signature.
    PROCEDURE DETAIL:

    - Department Heads review the purchase report to determine which


    invoices have not been processed and are accrued. Supporting
    documentation may include a printout from the checkbook tool, packing
    slip, delivery receipt, or invoice from the vendor.

    The reports that can be review are:


    1. Receiving Record
    2. GL
    PROCEDURE DETAIL:

    - All accruals are submitted to the Accounting Department by the


    deadline communicated by Accounting Department.

    All accruals should be


    submitted before end of month.
    (List + Copy Invoices)
    27th of the month
    PROCEDURE DETAIL:

    - The DOF / Controller or Assistant Director of Finance (ADOF)


    specifically ensures accruals are made and calculations documented
    each month for the following:

    - Goods & Services received but invoice not processed yet


    - Utilities for the month
    - Bonus Accruals
    - Marriott Billing (OFB)
    - Wages & Benefits
    CHECKING POINTS :

    - Contract & PO are not


    qualified as supporting
    documents to accrual

    For Goods received but not


    invoiced
    - Evidences must be
    provided that the goods
    have been substantially
    received before month-
    end.
    CHECKING POINTS :

    - If the services provided by frequency and


    payment is distributed when the services
    is finished and check by relevant Dept, a
    completion report should be obtained
    For Services before the accruals
    rendered but
    not invoiced:
    - If the services is provided upon
    requirement from Hotel (such as Casual
    DW) attendance record should be checked
    and signed by user dept & HR.

    - Accrual based on budget is not


    acceptable.
    ACCRUAL JOURNAL:

    Journal: Journal:
    1. When the invoice 2. When the invoice paid:
    accrued: Accrue
    - Bank Out
    Expenses If Over Accrued:
    - Accrue Accrue
    -Expenses
    - Bank Out
    If Less Accrued:
    Accrue
    Expenses
    - Bank Out
    Checklist
    Copy Invoices
    LEVEL 1

    SOP ACCRUAL & PREPAID (A&L – 5)

    PREPAID:

    Supporting documentation is available for all prepaid accounts


    to include:

    - Amortization Schedule includes original cost and monthly charge


    - Original Invoice representing the total cost of the prepaid item

    Journal: Journal:
    1. When the invoice 2. When amortize monthly
    paid Expenses
    Prepaid Insurance - Prepaid Insurance
    - Bank Out
    PREPAID ACCOUNT ANALYSIS

    Account # 150123-Prepaid Insurance

    Supplier Name Nature of prepaid Amortisation Charged to Invoice Previous year Amortisation - Current Year Total Balance Period
    Period (account #) Total B/F Balance Jan Feb Mar Apr May Jun Jul Aug Sep Current year C/F Remaini
    WTW InsuranceWTW GeneralLiab NovSept21 Nov20-Sept21 0480-730108 26,600,794.00 21,764,286.00 (2,418,254.00) (2,418,254.00) (2,418,254.00) (2,418,254.00) (2,418,254.00) (2,418,254.00) (2,418,254.00) (2,418,254.00) (2,418,254.00) (21,764,286.00) - -
    WTW InsuranceWTW Fidelity NovSept20 Nov20-Sept21 0480-730108 21,215,410.00 17,358,062.00 (1,928,674.00) (13,034,750.00) (239,463.80) (239,463.80) (239,463.80) (239,463.80) (1,436,783.00) (17,358,062.20) (0.20)
    WTW InsuranceWTW AutoMobile NovSept21 Nov20-Sept21 0480-730108 40,155,500.00 30,116,624.00 (3,346,292.00) (3,346,292.00) (3,346,292.00) (3,346,292.00) (3,346,292.00) (3,346,292.00) (3,346,292.00) (3,346,292.00) (3,346,288.00) (30,116,624.00) - -
    WTW InsuranceFee WTW NovSept20 Nov20-Sept21 0410-691003 10,937,998.00 8,949,272.00 (994,363.00) (994,363.00) (994,363.00) (994,363.00) (994,363.00) (994,363.00) (994,363.00) (994,363.00) (994,368.00) (8,949,272.00) - -

    Opening Balance 88,725,714.60 88,725,714.60 77,310,661.80 56,807,002.80 42,168,630.00 59,454,052.20 49,487,705.03 36,498,736.15 25,838,840.05 16,615,726.96 88,725,714.60 4,928,408.78
    (+) Debit - - 27,106,245.00 27,106,245.00
    (-) Monthly Charge (11,415,052.80) (20,503,659.00) (14,638,372.80) (9,820,822.80) (9,966,347.18) (12,988,968.88) (10,659,896.09) (9,223,113.09) (9,223,114.09) (110,903,550.82)
    (=) Closing Balance 88,725,714.60 77,310,661.80 56,807,002.80 42,168,630.00 59,454,052.20 49,487,705.03 36,498,736.15 25,838,840.05 16,615,726.96 7,392,612.87 4,928,408.78

    G/L Closing Balance 77,310,665.27 56,807,005.27 42,168,632.27 59,454,054.27 49,487,707.27 36,498,738.30 25,838,842.11 16,615,728.92 7,392,614.83

    WTW Auto Mobile 40.155.500


    Periode 01 October 2020 – 1 October 2021 (12 Bulan)
    Accounting will amortize the expenses monthly.
    Expenses per bulan : 40.155.500 / 12 = Rp 3.346.292
    THANK YOU !

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