Once you have set up accruals in the Purchase Ledger Options found in the System module which is security permission driven and you have set up your analysis records, and you have posted a purchase ledger invoice or credit note using accruals, you can then check the journals created.
When you save or post a purchase ledger invoice or credit note where an analysis that is set up as an accrual analysis is used, a Nominal Journal is created and posted automatically that reverses the sales transaction.
Post a transaction using an analysis set up as an accrual, the following takes place:
A nominal journal is automatically created and posted that reverses the purchase transaction. The reversal journal will reverse out the value that is to be accrued.
Where you have not selected the Defer Accrual option, the full value of the invoice less the first accrual will be reversed.
Where you have selected the Defer Accrual, the full value of the invoice will be reversed.
One side of the journal reverses the P&L side of the original detail line on your transaction, while the other updates the Accrual Nominal Account specified on the detail line of the transaction.
A recurring accrual journal is created and batched to split up the total net value of the purchase ledger invoice or credit note that you have posted to accrue over the specified number of periods on the transaction detail line or lines.
The nominal account specified on the detail line is the P&L Update Nominal account from the analysis on the original transaction posting.
The debit and credit on the journal detail line reverses the original transaction posting.
The value of the accrual is the net value of the original detail line divided by the total number of periods that the transaction detail line is set to accrue across.
Find the accrual journal
Click Financials then Enquiries and then click Nominal Transactions.
Note: All transactions are displayed. You can narrow down your search to find the accrual nominal by using the advanced filters. You can also search on the columns directly by pointing the mouse to the name of the column and click on the icon and choose from the available filter list, then click OK.
Example:
We are going to use a simple example with a purchase ledger invoice where you have only entered 1 detail line.
You post a purchase ledger invoice with a detail line where you select an analysis set up for accruals for a net value of £12,00.00 and your Accrual Period is set on the accrual analysis to be 12 periods and you are not deferring the accrual.
The P&L Nominal Account that the accrual analysis updates, is credited with a value of £1,100.00.
Financials automatically creates a recurring accrual journal for 11 postings set to debit the Nominal Account with a value of £100.00 each.
If you use the deferral accrual, the number of postings on the recurring accrual journal will be set to 12 postings.
The recurring journal for the remaining values and periods is automatically created for you however you have to post them manually from the batch.
For more information on how to access the automatically batched recurring accrual journal after posting a purchase ledger invoice or credit note, please refer to our Access the recurring accrual journal created for purchase transactions article.