Maintenance fees or contracts and software licenses with a term date beginning after July 1. Subscriptions or membership fees that begin in the next fiscal year.Advance travel payments for trips to be taken after July 1.Such amounts classified as prepaid expense items are not reflected in the expenses for the current year, but are charged to a subsequent fiscal year.Please note, for larger expense items, more specific fiscal year allocations may be necessar If, for example, an expense is for a recurring calendar year expense (and thus for 6 months in one fiscal year and 6 months in another fiscal year) in this case, please simply charge the entire item to the current fiscal year. In these cases, the fiscal year in which the majority of the expense will be incurred is the proper fiscal year to which it should be charged. For example, a subscription renewal or maintenance contract may be for 9 months of one fiscal year and 3 months of another fiscal year. Please note in some instances an expense may not occur within the confines of one fiscal year. Items over $1,000 that are paid during the current fiscal year, but will not be received until the next fiscal year will be considered prepaid expenses.In all cases, please code the expense for payment as you normally would and also make a clear notation on the expense item itself which fiscal year should be charged based on the criteria outlined within this document.For larger expense items it may be necessary to provide the Business Office with evidence of when the goods were received and/or services were rendered.For prepaid expense adjustments, the entry will decrease current year expenses and increase subsequent year expenses for the amount of the transaction.For accrued expense adjustments, the entry will increase current year expenses and decrease subsequent year expenses for the amount of the transaction.If an adjustment is warranted, the Business Office will post an adjusting journal entry to ensure the payment is expensed to the proper fiscal year. The Business Office currently reviews all items submitted for payment. With respect to prepaid and accrued expenses, departments are required to review all expenses greater than $1,000 that are received throughout the entire fiscal year to ensure that the payment is expensed to the proper fiscal year.Prepaid and accrued adjustments are intended to ensure that the College's annual financial statements present fairly, in all material respects, the financial results for the year.It is important to note that neither the budgeting process nor the purchasing process has any bearing on when a transaction is recorded for financial accounting purposes. If they are received after June 30, they will be recorded in the new fiscal year. Goods and/or services received on or before June 30 will be recorded as an expense in the fiscal year ended June 30.Swarthmore College's fiscal year runs from July 1st to June 30. For that reason, expenses are recorded in the period when goods are received and/or services are rendered. In accordance with generally accepted accounting principles, Swarthmore College is required to report transactions in the proper fiscal period.Email: Controller's Office Prepaid and Accrued Expenses
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