Well there are a few things you can do, one is the right way (i.e.
GAAP) the other is still correct but the lazy way.
The whole point of an accrual is record the expense in the properly
period, i.e. by debting the expense and crediting the liability. Most
times accruals are estimated b/c you dont know what the expense will
be so you have to estimate it. With Accounts payable its a little
different. Most people just leave A/P open after year-end and include
all the invoices with a 12/31 or earlier date in a/p. When you pay
the invoice, you debit the a/p and credit cash. Pretty easy.
To answer your question the accruals will just stay on the books until
you pay them. For instance if there is a salary accrual or property
tax accrual it simply stays as a liabilty until you pay it thus
elimanting the accrual witha a debit to the accrual and a credit to
cash.
I mentioned there was an lazy way to mess with accrual and a right
way. The way I explained above is the right way. The lazy way is
when you pay the item that was accrued, just to hit the expense
accounts insteado of the accrual. You may think you are recording an
expense twice when you do this. but your not, b/c your accrual
balance will stay the same all year long. Therefore when December
31st comes around next year you dont have to adjust your accruals
balance again. It all washes in the end, so some people set up the
accrual and dont ever mess with it, always hitting the expense. Then
at year-end the look at the accrual balance and decide if it should be
lowered. Let me know if you have any more questions. |
