"Double Dating" transactions?

Dale Alspach alspach at math.okstate.edu
Tue Aug 31 00:04:36 EDT 2004


The thing about accrual accounting is that it is permissible (often
required) to make
correcting entries long after the fact. (As long as you do not try to hide
the fact that that is what you are doing. Businesses do this frequently
because many things which are predicted or thought to be true at a given
moment are not true. If you read the financial pages at all you surely have
seen articles to the effect that company AAA restated its earnings for 2001
and 2002, blah, blah, blah. The SEC is investigating ...)
If you find that in April of 04
you are due a refund, you can make correcting entries as I outlined
previously to show the real expense for tax as being (in the example) $30
less per month than you thought. This is your money that the government
owes you so it is an asset and typically is placed in accounts
receivable. It will sit there in accounts receivable 
until you get the refund check in June 04. Then you move it into your checking
account. Notice that this way the tax refund is not income.

Dale Alspach


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