An accrual entry is a temporary financial record used to record transient or provisional transactions, such as prepayments or receipts that have not yet been processed in the accounts. Its purpose is to correct financial reporting and ensure the accuracy of operating results while the company waits for the transaction to be finalised in the accounts.
How does this work in accounting?
Companies often use accruals to spread paid expenses over a longer period. Examples of such costs are subscriptions and insurance that are paid annually in advance. This cost billing takes place once a year. To get the right periodic insights, companies want these costs to be included in the accounts on a monthly or quarterly basis. Each accounting software package has its own way of recording these types of transactions. But there are also similarities. For example, there is usually the use of a suspense account and the statement of a period for apportionment.
Transit booking in TriFact365
TriFact365 supports the use of transit entries. This often means that additional settings are required in the accounting package or in TriFact365. Want to know how to book accrual entry from within TriFact365? Then click here.