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N/L Accruals

This page introduces the N/L Accruals feature that allows you to post Sales and Purchase Invoices to the Nominal Ledger on an accruals basis.

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In normal circumstances the full value of each row in a Sales or Purchase Invoice will be posted to a Sales or Purchase Account in the related Nominal Ledger Transaction. However, this might not be appropriate if an Invoice is for a service or contract that is spread over time. In this case, it might be appropriate for the Invoice row value to be posted to the Sales or Purchase Account gradually over the period of the service or contract, especially if that period crosses over into a new fiscal year.

For example, you receive an Invoice for a service contract for one year to the value of 120.00. You do not want the Purchase Account to be debited with the full 120.00 at once, but instead you need the Purchase Account to be debited with 10.00 per month over the year (the contract period). When you enter such an Invoice, enter the Code of an N/L Accrual record on flip C (flip B in the case of a Sales Invoice). This N/L Accruals record will contain the rules governing the accrual process. When you mark the Invoice as OK and save, the resulting Nominal Ledger Transaction will post its value (120.00 in the example) to the Accrual Account specified in the N/L Accrual record, not to the Purchase Account. A record will also be created in the Simulation register containing the appropriate number of sets of balancing postings (twelve in the example, one per month), each crediting the Accrual Account and debiting the Purchase Account with one twelfth of the total amount (10.00 in the example). One Nominal Ledger Transaction per month will then be created from these balancing postings when you run the 'Generate N/L Accrual Transactions' Maintenance function. This process transfers the value of the Invoice row from the Accrual Account to the Purchase Account at the rate of 10.00 per month.

If you need to see a list of the postings to the Accrual Account that have not yet been debited to Purchase Accounts (or, on the sales side, credited to Sales Accounts), produce an Accrual Report.

Please refer to the following pages for details about the N/L Accruals feature:

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Settings in the Nominal Ledger:

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