[GNC] How to enter an accrued expense before Invoice?

[Wesley Brooks]

I will try to ask another way.

My normal process...

## Entering an Invoice from Vendor ##

Business > Vendor > New Bill:

  * Set date opened to the date of the transaction - eg when received
    the invoice.
  * Select the vendor.
  * Maybe add notes.

On the invoice entry page:

  * Set each line/entry date to the same date as the date opened.
  * Description, quantity, unit price needs no explanation.
  * Set "Action" to hours for services and "Material" to bought things.
    To be honest I don't know what this is used for. Will look it up
    another time.
  * Select the expense account, so in this case for accounting
    Expenses:Professional Fees:Accounting.
  * Post the invoice...

On the post invoice pop-up:

  * Post date - same as opening again!
  * Due date from invoice.
  * Description - always try to remember to add this one. Really
    frustrating when you forget - see other email about wanting to start
    fresh!
  * Post to account - I leave this as default Liabilities:Accounts Payable

## Paying a Due Invoice from Vendor ##

When the time comes I then process the payment:

Business > Vendor >  Process Payment

  * Set translation date to the date the money left my account.
  * Select the Transfer Account to match where the money came from. In
    my case Assets:Current Assets:Business Account

## ...return to discussion... ##

When following the above process GNUCash automatically creates entries 
in Expenses:Professional Fees:Accounting and Liabilities:Accounts 
Payable when the invoice is raised. Once past the due date for the 
invoice it appears on the pop up from Business > Vendor > Bills Due Reminder

Once the bill is paid (using process above) GNUCash automatically adds 
balancing entry to Liabilities:Accounts Payable and adds a deduction to 
the Transfer account Assets:Current Assets:Business Account.

After the above bill entry and payment is completed the report in 
Business > Vendor > Vendor Overview > MyAccountantLtd balances with no 
mention of prepayments, or imbalances.

## ...return to my original question... ##

I understand what an accrued expense is, and how in theory it should 
work. But I haven't seen how to enter it in a way that when I raise the 
bill following the above process the debt moves from the Accrued 
expenses to the Accounts payable account?

A little frustration with the system as it stands at the moment is that 
if I subsequently need to edit a bill (wrong date, missed description 
when posted, typo in line, etc), if I unpost it make a change then 
GNUCash forgets the connection between the bill and the transaction that 
cleared the bill. I then need to delete the payment that cleared the 
bill and then re-enter it.

Does that explain the question better?



On 14/05/2024 22:37, David Cousens wrote:
> Wesley,
>
> you have to think through what the objective of the accrued accounting
> expense is and that is to charge the expense to the expense account as
> it accrues.  You will eventually have to pay the money to the
> accountant when he presents his invoice so the total accrued amount is
> a liability for your business. On some regular basis (weekly/monthly
> etc - asks your accountant for advice), most likely with a scheduled
> transaction you could make an entry of the form:
>
> Expense:Accrued Accounting     DR xxx
> Liability:Accrued Accounting            CR xxx
>
> where the sum of xxx over your accoutning period will be roughly equal
> to the annual value of the accounting charges yyyy.
>
> WHen you receive the invoice you would create an bill which transfers
> the accrued liability to your accounts payable, i.e.
>
> Liability:Accrued Accounting  DR yyyy
> Expense:Accrued Accounting             CR zzz
> Liability:Accounts Payable             CR yyyy + zzz
>
> where zzz is an adjustment for the amount the invoice exceed your
> accrued accounting expenses in the liability account. ( if the amount
> of the invoice is less than the accrued expenses you would debit the
> Expense:Accrued Accounting account and subtract zzz from yyy in the
> third line.
>
> When you actually make the payment it is
>
> Liability :Accounts Payable  DR yyyy + zzz
> Asset: Bank:Cheque                      CR yyyy + zzz
>
> where zzz was credited to the accrued expense account (invoice larger
> than accrued amount by zzz) and replacing with yyyy-zzz where the
> invoice amount is less than the accrued amount by zzz.
>
> There may be alternative ways of recording which may be jurisdiction
> dependant - check with you accountant - that's what you are paying him
> for.  The aim is to use a value of the periodic accruals xxx which sums
> pretty closely to the expected final invoice amount.
>
> As always the above does not constitute specific accounting advice and
> you need to discuss exactly what is required with your accountant.
>
> David
>
>
>
> On Tue, 2024-05-14 at 14:39 +0100, Wesley Brooks wrote:
>> Dear users,
>>
>> I'm a basic level user of GNUCash, and generally enter transaction
>> details mostly by raising bills/invoices and subsequently processing
>> the
>> payments. The only exceptions to this are how I enter my salary
>> payments, and transfers between my company and private accounts
>> covering
>> director loans and repayments.
>>
>> My accountant has added their charge for accounting and an accrued
>> expense on their submissions, long before they would raise an
>> invoice.
>>
>> How do I generate an accrued expense so that it works with a
>> subsequently raised the invoice, and processed payment in the
>> following
>> year?
>>
>> Thanks.
>>
>> _______________________________________________
>> gnucash-user mailing list
>> gnucash-user at gnucash.org
>> To update your subscription preferences or to unsubscribe:
>> https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> -----
>> Please remember to CC this list on all your replies.
>> You can do this by using Reply-To-List or Reply-All.
> _______________________________________________
> gnucash-user mailing list
> gnucash-user at gnucash.org
> To update your subscription preferences or to unsubscribe:
> https://lists.gnucash.org/mailman/listinfo/gnucash-user
> -----
> Please remember to CC this list on all your replies.
> You can do this by using Reply-To-List or Reply-All.
-- 

Wesley Brooks PhD BEng

+44 (0) 1744 410490
+44 (0) 7833 067513

My in office time is non-standard, and currently Monday to Thursday 
06:00 - 14:00.

*I do not expect anyone to respond or acknowledge emails outside of 
their own usual working hours.*

Brewed Up Research Products & Services Limited

Unit 14, Catapult Too Parade Street Building, Parade Street, St Helens, 
Merseyside, WA10 1LX.

Company Number: 11602997