Balances forward of unused cash advances from previous year

Maf. King maf at chilwell.net
Thu May 18 07:36:50 EDT 2017


Hi Anita.

I think I would record them at start of year in an asset account - something 
like Assets:AdvancePaymentsMade.  Then as you "use up" the pre paid expense, 
transfer between Expenses:widgets and A:AdvPay so that the asset tends to 
zero.

This presumes that if the expense didn't really happen, you'd be entitled to a 
refund of the payment, and that any tax treatment is expecting you to claim 
for the expense as it happens, not when you paid last year (ie not accrual 
basis).

It also presumes that you have checked your local laws and practices for any 
specific guidance, esp. in the case of business accounting.


IANAA etc.
Maf.


On Thursday, 18 May 2017 12:16:44 BST Anita Graves wrote:
> Dear All GC friends,
> 
> In the previous financial year, there were some funds advanced to two
> different persons for two different expense categories that appear in the
> account tree of that year.  In both of these accounts, there are now
> expenses to record to use up those cash advances, and I have the same
> accounts in this year’s account tree.
> 
> I do not know how to account for these unusued balances that carry over to
> this new year and to record the expenses in this new year to zero out the
> balances of the cash advances.  Are they to be confused with the equity
> account?  Balances forward???  Are they child accounts to some parent
> accounts?
> 
> Thanks for your help….
> 
> Anita






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