Test your knowledge
1)What causes an accrual?
2)What is the journal entry required to record an accrual?
Qs a couple students to answer each, to check for differing answers
Answers:
On next slide
As we discussed in our fundamentals module, accruals result when expenses have been incurred but an invoice or receipt has not yet been provided by the supplier
Common examples:
Internet usage
Electricity usage
Water usage
Even though an invoice has not been received, the expense needs to be recognized in the period, through an accrual entry
Typically the Finance Manager or CFO has a detailed listing of monthly accruals required including:
Vendor
Expense type
Amount
As a junior accountant, you may be responsible for posting accrual entries but typically your manager will provide you with the details to post.
It is important that you double check all details as you input them into journal entries.