[GNC] How To Handle Prepayments

[Tom Balaban]

Thanks Elvis.

Because of the casual way the insurance company handles this highly 
specialized business, only had 5 transactions to post for the entire 
year. While report monthly I often don't get bills for 2 or 3 months.

I ended up doing the Pre-Paid thing for the initial payment, then 
charging Insurance against that credit each month after I submit my 
report until it was exhausted. Subsequent payments were expensed 
directly against Insurance.

It took me just few minutes to that this afternoon and I now have much 
better sense of what my obligation is to them.

I care even if they don't.  ;-))

Best,
Tom

------ Original Message ------
From: "elvis" <elvis at dogonfire.com>
To: gnucash-user at gnucash.org
Sent: 12/15/2018 5:50:49 PM
Subject: Re: [GNC] How To Handle Prepayments

>Unless you really need to do accrual accounting, then don't. If you are never getting it back, it is not much of an asset.
>
>Put it though as Insurance Expense, Initial Payment, Payment 2 etc.
>
>Accounting is there to help you, not make more work to make it "correct".
>
>
>On 16/12/18 7:06 am, tbalaban wrote:
>>My Company pays an initial payment to our insurer at the beginning of each
>>policy year. As we incur insurance costs based on event participants, that
>>initial payment is charged. After it is exhausted we get a monthly bill for
>>the amount due. In no case do we ever get the initial payment back.
>>
>>I'd like to treat the initial payment as a credit to insurer's A/P account
>>then each month create a bill for the amount payable.
>>
>>Is this the correct way to handle such a transaction?
>>
>>Assuming it is, how do I credit the amount due from whatever account I
>>posted the initial payment to?
>>
>>In practice we pay the initial payment in February, the start of our paolicy
>>year. Usually, in April or May, the initial payment is exhaused and we have
>>to send more money to pay that month's bill. I'm not at all clear on how to
>>post this situation.
>>
>>I'd appreciate knowing how to do this in GNUCash as well as any comments on
>>the applicable general accounting rules. In Quickbooks I could debit or
>>credit A/R or A/P diectly and selects the customer or vendor required. Since
>>that capabiity does not appear to be available in GNUCash, how do I post it?
>>
>>Many thanks for your already generous help.
>>
>>
>>
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>
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