{"id":871,"date":"2018-11-06T20:40:51","date_gmt":"2018-11-06T20:40:51","guid":{"rendered":"http:\/\/www.clubtreasurer.com\/blog\/?page_id=871"},"modified":"2026-02-11T15:10:16","modified_gmt":"2026-02-11T15:10:16","slug":"advanced-accounting-accruals-and-prepayments","status":"publish","type":"page","link":"https:\/\/clubtreasurer.com\/blog\/advanced-accounting-accruals-and-prepayments\/","title":{"rendered":"Accruals and Prepayments"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\">Cash Accounting vs. Accruals Accounting<\/h3>\n\n\n\n<p><strong>Clubtreasurer<\/strong> uses a modified <strong>cash accounting<\/strong> system by default, which suits the needs of most small clubs and community organisations.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">What is Cash Accounting?<\/h4>\n\n\n\n<p>With cash accounting, you only record income or expenses when money is actually received or paid out. For most clubs, simply using <strong>Receipts<\/strong> and <strong>Payments<\/strong> to track money moving in and out is all that\u2019s needed.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">What is Accruals Accounting?<\/h4>\n\n\n\n<p>Some organisations prefer to use <strong>accruals accounting<\/strong> to get a more accurate picture of their financial position by matching income and expenses to the period they relate to, rather than when the cash is exchanged.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Prepayments<\/strong> = Money paid or received in advance, for goods or services that relate to a future period.<\/li>\n\n\n\n<li><strong>Accruals<\/strong> = Money owed or due (costs or income that have occurred but not yet paid or received).<\/li>\n<\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Example:<\/h4>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Club A receives new kit on <strong>1st January<\/strong> but pays the supplier on <strong>5th February<\/strong>.\n<ul class=\"wp-block-list\">\n<li><strong>Cash Accounting:<\/strong> Records the payment in February (when cash leaves the bank).<\/li>\n\n\n\n<li><strong>Accruals Accounting:<\/strong> Records the cost in January (when the kit is used), and shows the payment in February as a reduction in the outstanding liability.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Recording Accruals &amp; Prepayments in Clubtreasurer<\/strong><\/h3>\n\n\n\n<p>Clubtreasurer supports both <strong>simple<\/strong> and <strong>advanced<\/strong> accrual\/prepayment entries.<\/p>\n\n\n\n<p class=\"has-neve-link-hover-color-color has-nv-light-bg-background-color has-text-color has-background has-link-color wp-elements-4e2fa7c9ac6c898d3bca3020a6f347c4\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-nv-dark-bg-color\"><strong>Before You Start<\/strong><br><br><em>If you&#8217;re adding entries for a <strong>past financial year<\/strong>, you\u2019ll need to temporarily change your financial year setting under: <strong> Setup &gt; Organisation<\/strong><\/em><\/mark><\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity is-style-wide\"\/>\n\n\n\n<div style=\"height:100px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-center has-nv-light-bg-background-color has-background\">Simple Accruals &amp; Prepayments<\/h2>\n\n\n\n<h2 class=\"wp-block-heading\">About Simple Accruals &amp; Prepayments<\/h2>\n\n\n\n<p>The <strong>Simple Accruals and Prepayment<\/strong> features in Clubtreasurer will meet the requirements of most customers and is designed for cash-based organisations with basic accrual\/prepayment requirements, e.g. end of year accruals balance only. <\/p>\n\n\n\n<p>If you need to produce your accounts on an ongoing accruals basis you should review the <a href=\"#advancedAccruals\">Advanced Accruals &amp; Prepayments<\/a> feature.  <\/p>\n\n\n\n<h4 class=\"wp-block-heading\">How it works<\/h4>\n\n\n\n<p>Clubtreasurer includes special accounts called <strong>*DEBTORS<\/strong> and <strong>*CREDITORS<\/strong> to help you track:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Debtors<\/strong> (money owed to you)<\/li>\n\n\n\n<li><strong>Creditors<\/strong> (money your club owes)<\/li>\n<\/ul>\n\n\n\n<p>You can also create your own Debtor or Creditor accounts if needed.<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>Create normal Receipt\/Payment entries using the <strong>*DEBTORS<\/strong> or <strong>*CREDITORS<\/strong> account.<\/li>\n\n\n\n<li>These entries will show up as <strong>Current Assets<\/strong> (Debtors) or <strong>Current Liabilities<\/strong> (Creditors) on your Balance Sheet.<\/li>\n\n\n\n<li>When the cash is actually received or paid, use Clubtreasurer\u2019s <strong>Reverse<\/strong> feature to cancel the original entry and record the real transaction with the correct date and bank account.<\/li>\n<\/ol>\n\n\n\n<p>*See <strong>Receipts &amp; Payments<\/strong> help page for how to reverse transactions.<\/p>\n\n\n\n<p class=\"has-text-align-left has-nv-site-bg-color has-nv-dark-bg-background-color has-text-color has-background has-medium-font-size\" id=\"EA\"><strong>1: Expense&nbsp;Accruals<\/strong> (Cost incurred now, paid later)<\/p>\n\n\n\n<p><em><strong>Scenario<\/strong>: You need to accrue for \u00a3100 food &amp; drink costs that were incurred in January, but not yet paid. The expense should appear on the&nbsp;P&amp;L in January and show a liability (creditor) balance for the accrual in the Balance Sheet.&nbsp;In February, the expenses are paid to the supplier and the liability is reversed and cash\/bank balance is reduced.<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 1: (January<\/strong>): record the&nbsp;<strong>Expense Accrual&nbsp;<\/strong>by creating a new&nbsp;<strong>Payment<\/strong>&nbsp;transaction against your&nbsp;<strong>Creditor A\/c&nbsp;<\/strong>when&nbsp;<em>occurred<\/em>.<br><br>Your January P&amp;L will now show a \u00a3100 charge against Food &amp; Drink Expenses, and the Creditor balance will show under liabilities in your Balance Sheet:<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background\" style=\"border-style:none;border-width:0px\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>10-Jan<\/td><td>Payment &#8211; Food &amp; Drink Expenses<\/td><td>Creditor A\/c<\/td><td>\u00a3100<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 2: (February<\/strong>): when the supplier is paid:\n<ul class=\"wp-block-list\">\n<li>2.1: Open and&nbsp;<strong>Reverse&nbsp;<\/strong>the original January&nbsp;<strong>Expense Accrual Payment<\/strong>&nbsp;transaction (Use the &#8220;<strong>Reverse<\/strong>&#8221; button):  <\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\" style=\"border-width:1px\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td><strong>1-Feb<\/strong><\/td><td>Payment &#8211; Food &amp; Drink Expenses<\/td><td>Creditor A\/c<\/td><td><span class=\"has-inline-color has-nv-c-2-color\"><strong>&#8211; \u00a3100<\/strong><\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>2.2:&nbsp;<strong>Create<\/strong>&nbsp;(or Import) a new&nbsp;<strong>Payment<\/strong>&nbsp;transaction against your Bank A\/c. Note this cancels out the Food &amp; Drink Expense so it correctly shows as zero on your P&amp;L in February. The liability balance is also cancelled out and the Bank A\/c balance now shows the cash has been paid out.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\" style=\"border-width:1px\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>1-Feb<\/td><td>Payment &#8211; Food &amp; Drink Expenses<\/td><td><strong>Bank A\/c<\/strong><\/td><td><strong>\u00a3100<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><span class=\"wp-rich-text-font-awesome-icon wp-font-awesome-icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"fas\" data-icon=\"book-open-reader\" class=\"svg-inline--fa fa-book-open-reader \" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\"><path fill=\"currentColor\" d=\"M160 96a96 96 0 1 1 192 0A96 96 0 1 1 160 96zm80 152V512l-48.4-24.2c-20.9-10.4-43.5-17-66.8-19.3l-96-9.6C12.5 457.2 0 443.5 0 427V224c0-17.7 14.3-32 32-32H62.3c63.6 0 125.6 19.6 177.7 56zm32 264V248c52.1-36.4 114.1-56 177.7-56H480c17.7 0 32 14.3 32 32V427c0 16.4-12.5 30.2-28.8 31.8l-96 9.6c-23.2 2.3-45.9 8.9-66.8 19.3L272 512z\"><\/path><\/svg><\/span> <em>If your accrual from Step 1 was included in an opening creditor balance and no actual transaction exists then you can combine Steps 2.1 and 2.2 into an <strong>Account Transfer<\/strong>: <\/em><br><em>&#8211; FROM the <strong>Cash\/Bank Account <\/strong>the accrual was paid out of<\/em><br>&#8211; <em>TO the <strong>Creditor Account.<\/strong> <\/em><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p class=\"has-text-align-left has-nv-site-bg-color has-nv-dark-bg-background-color has-text-color has-background has-medium-font-size\" id=\"RA\"><strong>2: Revenue Accruals<\/strong> (Income due now, paid later)<\/p>\n\n\n\n<p><em><strong>Scenario<\/strong>: Membership fees for John Smith are due in January for \u00a350. You need to recognise the membership income in your January P&amp;L, but as John has not yet paid these you must show this as a Debtor balance in your Balance Sheet. John pays his membership late in March and you now need to remove the Debtor balance and record the cash received into your Bank A\/c.<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 1: (January)<\/strong>: record the&nbsp;<strong>Receipt&nbsp;Accrual&nbsp;<\/strong>transaction by creating a new&nbsp;<strong>Receipt&nbsp;<\/strong>transaction against&nbsp;your&nbsp;<strong>Debtor A\/c<\/strong>&nbsp;when the membership is due:<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background\" style=\"border-style:none;border-width:0px\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>1-Jan<\/td><td>Receipt &#8211; Membership Receipts<\/td><td>Debtor A\/c<\/td><td>\u00a350<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 2: (March):<\/strong>&nbsp;when John pays:\n<ul class=\"wp-block-list\">\n<li>2.1: Open the original January&nbsp;<strong>Receipt Accrual<\/strong>&nbsp;transaction and create a reversing transaction (click <strong>Reverse&nbsp;<\/strong>button).<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td><strong>15-Mar<\/strong><\/td><td>Receipt &#8211; Membership Receipts<\/td><td>Debtor A\/c<\/td><td><span class=\"has-inline-color has-nv-c-2-color\"><strong>&#8211; \u00a350<\/strong><\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>2.2: <strong>Create&nbsp;<\/strong>(or Import) a new <strong>Receipt<\/strong> transaction against your Bank A\/c:<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>15-Mar<\/td><td>Receipt &#8211; Membership Receipts<\/td><td><strong>Bank A\/c<\/strong><\/td><td><span class=\"has-inline-color has-neve-text-color-color\"><strong>\u00a350<\/strong><\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"has-text-align-left has-nv-site-bg-color has-nv-dark-bg-background-color has-text-color has-background has-medium-font-size\" id=\"EP\"><strong>3: Expense&nbsp;Prepayments<\/strong> (Paid now, incurred later)<\/p>\n\n\n\n<p><em><strong>Scenario<\/strong>: You have paid for \u00a3100 Rental Costs in advance in January but they will not be incurred until February.&nbsp; This should be reflected in the Bank A\/c and Debtors balances in January Balance Sheet, but the expense should not show in the P&amp;L until February. Also, the Debtor balance should be cleared in February.<\/em><\/p>\n\n\n\n<p>Choose one of the Methods below for Expense Prepayments.<\/p>\n\n\n\n<p class=\"has-text-align-left has-nv-site-bg-color has-nv-c-2-background-color has-text-color has-background\">3.1 <strong>Expense&nbsp;Prepayments<\/strong> &#8211; <strong>Method 1<\/strong><\/p>\n\n\n\n<p><span class=\"wp-rich-text-font-awesome-icon wp-font-awesome-icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"fas\" data-icon=\"circle-exclamation\" class=\"svg-inline--fa fa-circle-exclamation \" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\"><path fill=\"currentColor\" d=\"M256 512A256 256 0 1 0 256 0a256 256 0 1 0 0 512zm0-384c13.3 0 24 10.7 24 24V264c0 13.3-10.7 24-24 24s-24-10.7-24-24V152c0-13.3 10.7-24 24-24zM224 352a32 32 0 1 1 64 0 32 32 0 1 1 -64 0z\"><\/path><\/svg><\/span> <em>You <span style=\"text-decoration: underline;\">must<\/span> use Method 1 if you import your bank statements via the&nbsp;<strong>Transaction Import<\/strong> process.<\/em> <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 1: (January):<\/strong>\n<ul class=\"wp-block-list\">\n<li>1.1: Create&nbsp;a normal&nbsp;<strong>Payment&nbsp;<\/strong>transaction to record the payment made from your bank account:<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>15-Jan<\/td><td>Payment &#8211; Rental Costs<\/td><td>Bank A\/c<\/td><td><span class=\"has-inline-color has-neve-text-color-color\">\u00a3<\/span>100<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>1.2: Create an equivalent <strong>Expense Prepayment&nbsp;<\/strong>(Payment) transaction with the <strong>same Date and Cost Code,<\/strong> but select a <strong>Debtor A\/c<\/strong> and, importantly, enter a&nbsp;<strong>negative&nbsp;value&nbsp;\u00a3-100<\/strong>&nbsp;(minus \u00a3100)<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>15-Jan<\/td><td>Payment &#8211; Rental Costs<\/td><td><strong>Debtor A\/c<\/strong><\/td><td><span class=\"has-inline-color has-nv-c-2-color\"><strong>&#8211; \u00a3100<\/strong><\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 2: (February):<\/strong> open and&nbsp;<strong>Reverse&nbsp;<\/strong>the January&nbsp;<strong>Expense Prepayment&nbsp;<\/strong>transaction:<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>1-Feb<\/td><td>Payment &#8211; Rental Costs<\/td><td>Debtor A\/c<\/td><td><span class=\"has-inline-color has-neve-text-color-color\"><strong>\u00a3100<\/strong><\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"has-text-align-left has-nv-site-bg-color has-nv-c-2-background-color has-text-color has-background\">3.2 <strong>Expense&nbsp;Prepayments<\/strong> &#8211; <strong>Method 2<\/strong><\/p>\n\n\n\n<p><span class=\"wp-rich-text-font-awesome-icon wp-font-awesome-icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"fas\" data-icon=\"circle-exclamation\" class=\"svg-inline--fa fa-circle-exclamation \" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\"><path fill=\"currentColor\" d=\"M256 512A256 256 0 1 0 256 0a256 256 0 1 0 0 512zm0-384c13.3 0 24 10.7 24 24V264c0 13.3-10.7 24-24 24s-24-10.7-24-24V152c0-13.3 10.7-24 24-24zM224 352a32 32 0 1 1 64 0 32 32 0 1 1 -64 0z\"><\/path><\/svg><\/span> <em>Method 2 <span style=\"text-decoration: underline;\">cannot<\/span> be used if you create your transactions using the <strong>Transaction Import<\/strong> process.<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 1: (January):<\/strong> create an\u00a0<strong><mark style=\"background-color:#fee4e4\" class=\"has-inline-color has-neve-text-color-color\">Account Transfer<\/mark><\/strong>\u00a0transaction from\u00a0<strong>Bank A\/c<\/strong>\u00a0to\u00a0<strong>Debtor A\/c<\/strong>\u00a0when the expense is paid.\u00a0<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-background\" style=\"background-color:#fdecec;border-style:none;border-width:0px\"><thead><tr><th>Date<\/th><th>Account Transfer From<\/th><th>Account Transfer To<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>15-Jan<\/td><td>Bank A\/c<\/td><td><\/td><td>&#8211;<mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-neve-text-color-color\">\u00a31<\/mark>20<\/td><\/tr><tr><td><\/td><td><\/td><td>Debtor A\/c<\/td><td>\u00a3120<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 2: (February):<\/strong> when the expense is incurred create&nbsp;<strong>Payment transaction<\/strong>&nbsp;from&nbsp;<strong>Debtor A\/c<\/strong><\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td><strong>1-Feb<\/strong><\/td><td>Payment &#8211; Rental Costs<\/td><td>Debtor A\/c<\/td><td><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-neve-text-color-color\">\u00a31<\/mark>20*<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><span class=\"wp-rich-text-font-awesome-icon wp-font-awesome-icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"fas\" data-icon=\"book-open-reader\" class=\"svg-inline--fa fa-book-open-reader \" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\"><path fill=\"currentColor\" d=\"M160 96a96 96 0 1 1 192 0A96 96 0 1 1 160 96zm80 152V512l-48.4-24.2c-20.9-10.4-43.5-17-66.8-19.3l-96-9.6C12.5 457.2 0 443.5 0 427V224c0-17.7 14.3-32 32-32H62.3c63.6 0 125.6 19.6 177.7 56zm32 264V248c52.1-36.4 114.1-56 177.7-56H480c17.7 0 32 14.3 32 32V427c0 16.4-12.5 30.2-28.8 31.8l-96 9.6c-23.2 2.3-45.9 8.9-66.8 19.3L272 512z\"><\/path><\/svg><\/span><em> If you need to spread the prepaid cost over a number of periods &#8211; for example you have paid an annual rental expense and need to charge 1\/12th cost to each month throughout the year &#8211; then you would repeat Step 2 for every month of your year and charge \u00a310 (\u00a3120\/12) to each month (or whatever portion is required). As you move through the year your Debtor balance will reduce to zero on the final month.<\/em><\/p>\n\n\n\n<p class=\"has-text-align-left has-nv-site-bg-color has-nv-dark-bg-background-color has-text-color has-background has-medium-font-size\" id=\"RP\"><strong>4: Revenue Prepayments \/ Deferred Income<\/strong><br><strong>(Received early)<\/strong><\/p>\n\n\n\n<p><em><strong>Scenario<\/strong>: In December, you received \u00a3250 in advanced Membership payments due in January. You need to record the advanced payment into your Bank A\/c as well as in your Creditor A\/c to reflect the liability.&nbsp; In January you can recognise the payment in your P&amp;L and clear the liability balance<\/em>.<\/p>\n\n\n\n<p>Choose one of the Methods below for Revenue Prepayments.<\/p>\n\n\n\n<p class=\"has-text-align-left has-nv-site-bg-color has-nv-c-2-background-color has-text-color has-background\">4.1 <strong>Revenue Prepayments \/ Deferred Income &#8211; Method 1<\/strong><\/p>\n\n\n\n<p><span class=\"wp-rich-text-font-awesome-icon wp-font-awesome-icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"fas\" data-icon=\"circle-exclamation\" class=\"svg-inline--fa fa-circle-exclamation \" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\"><path fill=\"currentColor\" d=\"M256 512A256 256 0 1 0 256 0a256 256 0 1 0 0 512zm0-384c13.3 0 24 10.7 24 24V264c0 13.3-10.7 24-24 24s-24-10.7-24-24V152c0-13.3 10.7-24 24-24zM224 352a32 32 0 1 1 64 0 32 32 0 1 1 -64 0z\"><\/path><\/svg><\/span> <em>You <span style=\"text-decoration: underline;\">must<\/span> use Method 1 if you import your bank statements via the&nbsp;<strong>Transaction Import<\/strong> process.<\/em> <\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 1: (December):<\/strong><br><br>1.1: create&nbsp;or import a&nbsp;<strong>Receipt&nbsp;<\/strong>transaction to record the advance membership payment(s) made into your bank account:<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>20-Dec<\/td><td>Receipt &#8211; Membership Income<\/td><td>Bank A\/c<\/td><td><span class=\"has-inline-color has-neve-text-color-color\">\u00a3<\/span>250<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li>1.2: then, create an equivalent&nbsp;<strong>Revenue Prepayment (Receipt)<\/strong>&nbsp;transaction with the <strong><em>same Date and Cost Code<\/em><\/strong>, but select a&nbsp;<strong>Creditor A\/c<\/strong>&nbsp;and, importantly, enter a&nbsp;<strong>negative&nbsp;value&nbsp;\u00a3-250<\/strong>&nbsp;(<em>minus \u00a3250<\/em>)<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>20-Dec<\/td><td>Receipt &#8211; Membership Income<\/td><td><strong>Creditor A\/c<\/strong><\/td><td><span class=\"has-inline-color has-nv-c-2-color\"><strong>&#8211; \u00a3250<\/strong><\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 2: In January<\/strong>, open and&nbsp;<strong>Reverse&nbsp;<\/strong>the December&nbsp;<strong>Revenue Prepayment&nbsp;<\/strong>transaction:<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td><strong>1-Jan<\/strong><\/td><td>Receipt &#8211; Membership Income<\/td><td>Creditor A\/c<\/td><td><strong>\u00a3250<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"has-text-align-left has-nv-site-bg-color has-nv-c-2-background-color has-text-color has-background\">4.2 <strong>Revenue Prepayments \/ Deferred Income<\/strong> &#8211; <strong>Method 2<\/strong><\/p>\n\n\n\n<p><span class=\"wp-rich-text-font-awesome-icon wp-font-awesome-icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"fas\" data-icon=\"circle-exclamation\" class=\"svg-inline--fa fa-circle-exclamation \" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\"><path fill=\"currentColor\" d=\"M256 512A256 256 0 1 0 256 0a256 256 0 1 0 0 512zm0-384c13.3 0 24 10.7 24 24V264c0 13.3-10.7 24-24 24s-24-10.7-24-24V152c0-13.3 10.7-24 24-24zM224 352a32 32 0 1 1 64 0 32 32 0 1 1 -64 0z\"><\/path><\/svg><\/span> <em>Method 2 <span style=\"text-decoration: underline;\">cannot<\/span> be used if you create your transactions using the <strong>Transaction Import<\/strong> process.<\/em><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 1: (Decembe<\/strong>r<strong>):<\/strong> create an\u00a0<strong><mark style=\"background-color:#ffeaea\" class=\"has-inline-color\">Account Transfer<\/mark><\/strong>\u00a0transaction from\u00a0<strong>Creditor A\/c<\/strong>\u00a0to\u00a0<strong>Bank A\/c<\/strong>\u00a0when monies are received.\u00a0<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-regular\"><table class=\"has-background\" style=\"background-color:#ffeeee;border-style:none;border-width:0px\"><thead><tr><th>Date<\/th><th>Account Transfer From<\/th><th>Account Transfer To<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>20-Dec<\/td><td>Creditor A\/c<\/td><td><\/td><td>-\u00a3250<\/td><\/tr><tr><td><\/td><td><\/td><td>Bank A\/c<\/td><td><span class=\"has-inline-color has-neve-text-color-color\">\u00a3<\/span>250<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Step 2: (January):<\/strong> create a&nbsp;<strong>Receipt<\/strong>&nbsp;transaction for the Membership payment against&nbsp;<strong>Creditor A\/c<\/strong>&nbsp;when the event is run.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-nv-light-bg-background-color has-background has-border-color has-nv-light-bg-border-color\"><thead><tr><th>Date<\/th><th>Receipt\/Payment &amp; Cost Code<\/th><th>Account<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td><strong>1-Jan<\/strong><\/td><td>Receipt &#8211; Membership Income<\/td><td>Creditor A\/c<\/td><td>\u00a3250<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity is-style-wide\"\/>\n\n\n\n<div style=\"height:100px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-nv-light-bg-background-color has-background\">Adding Opening Accruals &amp; Prepayment Balances<\/h2>\n\n\n\n<p>You can add opening balances for accruals and prepayments directly into your <strong>Debtor<\/strong> or <strong>Creditor<\/strong> accounts using Clubtreasurer\u2019s simple accruals method.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h4 class=\"wp-block-heading\">Adding Opening Balances (at setup)<\/h4>\n\n\n\n<p><strong>Step 1:<\/strong> <br>Go to your <strong>Debtor<\/strong> or <strong>Creditor<\/strong> account and enter the relevant <strong>opening balance<\/strong>.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Use <strong>Debtors<\/strong> for prepayments or income owed to you.<\/li>\n\n\n\n<li>Use <strong>Creditors<\/strong> for expenses incurred but not yet paid.<\/li>\n<\/ul>\n\n\n\n<p><strong>Step 2: <\/strong><br>When the actual payment is made later, simply create an <strong>Account Transfer<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>From:<\/strong> Your Cash\/Bank Account<\/li>\n\n\n\n<li><strong>To:<\/strong> The Creditor Account<\/li>\n<\/ul>\n\n\n\n<p>This cancels the brought-forward balance and reflects the outgoing cash movement.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><span class=\"wp-rich-text-font-awesome-icon wp-font-awesome-icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"fas\" data-icon=\"circle-info\" class=\"svg-inline--fa fa-circle-info \" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\"><path fill=\"currentColor\" d=\"M256 512A256 256 0 1 0 256 0a256 256 0 1 0 0 512zM216 336h24V272H216c-13.3 0-24-10.7-24-24s10.7-24 24-24h48c13.3 0 24 10.7 24 24v88h8c13.3 0 24 10.7 24 24s-10.7 24-24 24H216c-13.3 0-24-10.7-24-24s10.7-24 24-24zm40-208a32 32 0 1 1 0 64 32 32 0 1 1 0-64z\"><\/path><\/svg><\/span> <strong>No need to create a Payment or Receipt<\/strong> <strong>transaction<\/strong> \u2014 these were already recorded in the previous financial year and shouldn\u2019t affect the current Profit &amp; Loss account.<\/p>\n<\/blockquote>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h4 class=\"wp-block-heading\"><strong><span style=\"text-decoration: underline;\">Adding Opening Balances <em>Retrospectively<\/em><\/span><\/strong><\/h4>\n\n\n\n<p>If you forgot to include opening accruals or prepayments when first setting up your accounts, you can still add them later. Here\u2019s how:<\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><strong>Step 1: Temporarily Adjust the Financial Year<\/strong><\/h5>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Change your <strong>Financial Year-End<\/strong> to a date before the opening balance date.<\/li>\n\n\n\n<li>Go to: <strong>Setup &gt; Organisation &amp; Subscription<\/strong><\/li>\n\n\n\n<li>This lets you edit accounts that may otherwise be \u201clocked\u201d due to age.<\/li>\n<\/ul>\n\n\n\n<h5 class=\"wp-block-heading\">Step 2: Enter Opening Balances<\/h5>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Open your <strong>Debtor<\/strong> or <strong>Creditor<\/strong> account and enter the correct <strong>opening balance<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h5 class=\"wp-block-heading\">Step 3: Adjust the Current Year<\/h5>\n\n\n\n<p>If you\u2019ve already recorded a Receipt or Payment this year for a transaction that actually belongs to a previous year:<\/p>\n\n\n\n<p><strong>Example: Expense Accrual (Creditor A\/c)<\/strong><\/p>\n\n\n\n<p>3.1 <strong>Delete the Payment<\/strong> made from your bank account this year.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>This expense was from the <strong>prior year<\/strong>, so it shouldn\u2019t appear in this year\u2019s <strong>Profit &amp; Loss<\/strong>.<\/li>\n<\/ul>\n\n\n\n<p>3.2 <strong>Instead, create an Account Transfer<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>From:<\/strong> Your Bank Account<\/li>\n\n\n\n<li><strong>To:<\/strong> The Creditor Account<\/li>\n<\/ul>\n\n\n\n<p>This clears the opening balance and reflects the cash movement correctly \u2014 without affecting this year\u2019s income or expenses.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><span class=\"wp-rich-text-font-awesome-icon wp-font-awesome-icon\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"fas\" data-icon=\"lightbulb\" class=\"svg-inline--fa fa-lightbulb \" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 384 512\"><path fill=\"currentColor\" d=\"M272 384c9.6-31.9 29.5-59.1 49.2-86.2l0 0c5.2-7.1 10.4-14.2 15.4-21.4c19.8-28.5 31.4-63 31.4-100.3C368 78.8 289.2 0 192 0S16 78.8 16 176c0 37.3 11.6 71.9 31.4 100.3c5 7.2 10.2 14.3 15.4 21.4l0 0c19.8 27.1 39.7 54.4 49.2 86.2H272zM192 512c44.2 0 80-35.8 80-80V416H112v16c0 44.2 35.8 80 80 80zM112 176c0 8.8-7.2 16-16 16s-16-7.2-16-16c0-61.9 50.1-112 112-112c8.8 0 16 7.2 16 16s-7.2 16-16 16c-44.2 0-80 35.8-80 80z\"><\/path><\/svg><\/span> <strong>Account Transfers<\/strong> affect your <strong>Balance Sheet<\/strong> but <strong>not<\/strong> your <strong>Profit &amp; Loss<\/strong>.<\/p>\n<\/blockquote>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity is-style-wide\"\/>\n\n\n\n<div style=\"height:100px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-center has-nv-light-bg-background-color has-background\" id=\"advancedAccruals\">Advanced Accruals &amp; Prepayments (BETA)<\/h2>\n\n\n\n<p class=\"has-luminous-vivid-amber-to-luminous-vivid-orange-gradient-background has-background\"><strong><em>Complete\/Premium Plus feature<\/em><\/strong><em>: Access to <strong>Advanced Accruals &amp; Prepayments<\/strong> requires a <\/em><strong><em>Complete<\/em>\/<em>Premium Plus <\/em><\/strong><em>subscription. <strong>Trial <\/strong>users have full access to this feature but please note you will need to subscribe to Premium Plus to continue using this after your trial period is over. Existing <strong>Essentials\/Premium <\/strong>users can request a new 30-Day trial period for this feature &#8211; please raise a Support Ticket.<\/em> <\/p>\n\n\n\n<h2 class=\"wp-block-heading\">About Advanced Accruals &amp; Prepayments<\/h2>\n\n\n\n<p>This feature provides complex accruals and prepayments that follow the accounting &#8216;matching principle\u2019 which determines when income and expenditure should hit your P&amp;L account and Balance Sheet. Please note that the <a href=\"https:\/\/clubtreasurer.com\/blog\/advanced-accounting-accruals-and-prepayments\/\">Simple Accruals and Prepayment <\/a>features in Clubtreasurer will suit most cash-based organisations and you should consider the <strong>Advanced Accruals &amp; Prepayments<\/strong> only if your organisation has specific requirements to manage a significant volume of transactions as accruals and prepayments.<\/p>\n\n\n\n<p><strong><em>This feature is currently available under a Beta release. Please raise a Support Ticket if you would like access to this.<\/em><\/strong><\/p>\n\n\n\n<iframe src=\"https:\/\/docs.google.com\/presentation\/d\/e\/2PACX-1vQTvPsGklsDiMblbRje5p2PcFOf6xQJagZ2mJ4NZ46-5iZ1aIje1R8H2RbD758A6stY6A8YzWqtl-O9\/embed?start=false&amp;loop=false&amp;delayms=3000\" frameborder=\"0\" width=\"480\" height=\"299\" allowfullscreen=\"true\" mozallowfullscreen=\"true\" webkitallowfullscreen=\"true\"><\/iframe>\n\n\n\n<p>Click the \u201cFull Screen\u201d icon below <img data-opt-id=377836959  fetchpriority=\"high\" decoding=\"async\" class=\"alignnone size-full wp-image-725\" src=\"https:\/\/clubtreasurer.maxapex.net\/blog\/wp-content\/uploads\/2017\/09\/expand.png\" alt=\"\" width=\"20\" height=\"20\">&nbsp;to expand. Space bar or Enter to move slides.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-css-opacity is-style-wide\"\/>\n\n\n\n<div style=\"height:100px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-center has-nv-light-bg-background-color has-background\">Accounting for Funds held on behalf of Members for 3rd-Party Purchases  <\/h2>\n\n\n\n<p><strong>Scenario<\/strong><em>: Your club provides a free service to allow members to purchase club kit. The club collects kit orders and monies on behalf of its members, and places bulk orders to the kit supplier. Importantly, the&nbsp;club is only facilitating the ordering process; it therefore needs to record the member receipts into its bank account as liabilities\/creditors and importantly does NOT want to show the supplier payments in its P&amp;L account as they are not club transactions.<\/em><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>When kit monies are collected from members, create&nbsp;<strong>Account Transfer transactions&nbsp;<\/strong>from <strong>Creditor A\/c<\/strong> to <strong>Bank A\/c.&nbsp;<\/strong><em>If you have already entered or imported these as a normal Receipt Transactions you can bulk convert them into an Account Transfer &#8211; see below<\/em>\n<ul class=\"wp-block-list\">\n<li>\nDr Bank A\/c (BS)\n<\/li>\n\n\n\n<li>\nCr Creditor A\/c (BS)\n<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>When suppliers purchases made just create an opposite <strong>Account Transfer transactions<\/strong>&nbsp;from Bank A\/c to Creditor A\/c. <em>If you have already entered or imported these as a normal Receipt Transactions you can bulk convert them into an Account Transfer &#8211; see below<\/em>\n<ul class=\"wp-block-list\">\n<li>\nDr Creditor A\/c (BS)\n<\/li>\n\n\n\n<li>\nCr Bank A\/c (BS)\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<p><a href=\"#Top\">Back to top<\/a><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\">Other Sections<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/clubtreasurer.com\/blog\/?page_id=81\">Introducing Receipts &amp; Payments<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/clubtreasurer.com\/blog\/?page_id=896\">Creating Receipts and Payments<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/clubtreasurer.com\/blog\/?page_id=210\">Editing Receipts &amp; Payments<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/clubtreasurer.com\/blog\/?page_id=1557\">Document Attachment Links<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/clubtreasurer.com\/blog\/?page_id=579\">Importing Transactions<\/a><\/li>\n\n\n\n<li>Accruals and Prepayments<\/li>\n\n\n\n<li><a href=\"https:\/\/clubtreasurer.com\/blog\/?page_id=1050\">Mass Transaction Change &amp; Delete<\/a><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Cash Accounting vs. Accruals Accounting Clubtreasurer uses a modified cash accounting system by default, which suits the needs of most small clubs and community organisations. What is Cash Accounting? With cash accounting, you only record income or expenses when money is actually received or paid out. For most clubs, simply using Receipts and Payments to&hellip;&nbsp;<a href=\"https:\/\/clubtreasurer.com\/blog\/advanced-accounting-accruals-and-prepayments\/\" rel=\"bookmark\">Read More &raquo;<span class=\"screen-reader-text\">Accruals and Prepayments<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"class_list":["post-871","page","type-page","status-publish","hentry"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Accruals and Prepayments - Clubtreasurer Community<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/clubtreasurer.com\/blog\/advanced-accounting-accruals-and-prepayments\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Accruals and Prepayments - Clubtreasurer Community\" \/>\n<meta property=\"og:description\" content=\"Cash Accounting vs. Accruals Accounting Clubtreasurer uses a modified cash accounting system by default, which suits the needs of most small clubs and community organisations. What is Cash Accounting? With cash accounting, you only record income or expenses when money is actually received or paid out. 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