Invoice & Bill Posting Date Issues Across Multiple Periods

[John Ralls]

> On Dec 15, 2017, at 7:51 AM, Derek Atkins <warlord at mit.edu> wrote:
> 
> Adrien,
> 
> Adrien Monteleone <adrien.monteleone at gmail.com> writes:
> 
>> Sorry, allow me to rephrase, when do I acquire the pre-paid expense ASSET?
> 
> Can you please explain what you mean by a "pre-paid expense asset"?  Is
> it an Expense?  Or is it an Asset?
> 
> Could you give a concrete example of something that is a "pre-paid
> expense asset"?
> 
> Sorry for being dense, but I still don't grok what you're trying to do
> or how this is mapping into a real-world transaction.

Suppose you have an insurance policy that lets you either pay monthly or for a whole year, with the latter getting a 10% discount, and that even if you pay for the whole year you can cancel and get a pro-rata refund. The annual pre-payment is booked as an asset called "pre-paid expense". Each month you credit 1/12 of the annual payment to expenses:insurance. If 3 months in you cancel the policy, the refund creates a transfer transaction back to the bank account.

Regards,
John Ralls