Year End Accrual Form Instructions
The University follows General Accepted Accounting Principles (GAAP) which require that we follow accrual-based accounting. An accrual is a means of recording either 1) Revenues that have been earned, but not yet received/recorded or 2) Expenses that have been incurred but have not yet been invoiced or paid/recorded in the general ledger. The accrual allows the University’s financial statements to accurately reflect the current fiscal year revenues and/or expenses.
The Year-End Accrual Template facilitate a department’s ability to set up the following types of year-end accruals:
- Accounts Receivable Entry:
When is an Accounts Receivable Entry needed?
Answer: A department should create an Accounts Receivable entry when they have earned revenue in the current fiscal year and payment for that revenue will not be received until the following fiscal year.
Accounts Receivable Example - Expense Accrual Entry:
When is an Expense Accrual Entry needed?
Answer: A department should create an Expense Accrual entry when they have incurred an expense for the current fiscal year and the expense will not be paid prior to June 30th. If you have an expense that crosses fiscal years, such as a catering expense that covers June 29th through July 2nd, you would process an accrual for 50% of the invoice to capture 2/4 days that took place in the current fiscal year.
Expense Accrual Example - Revenue Deferral Entry:
When is a Revenue Deferral Entry needed?
Answer: If your department has received and deposited revenue in the form of a cash, check, or credit that relates to a program, event, course, etc. that is for next fiscal year, that revenue needs to be deferred until the next fiscal year. This is to ensure that revenue is not overstated in the current fiscal and that the revenue and expenses are recorded in the same fiscal year.
Revenue Deferral Example
The University follows General Accepted Accounting Principles (GAAP) which require that we follow accrual-based accounting. An accrual is a means of recording either 1) Revenues that have been earned, but not yet received/recorded or 2) Expenses that have been incurred but have not yet been invoiced or paid/recorded in the general ledger. The accrual allows the University’s financial statements to accurately reflect the current fiscal year revenues and/or expenses.
The Year-End Accrual Template facilitate a department’s ability to set up the following types of year-end accruals:
- Accounts Receivable Entry:
When is an Accounts Receivable Entry needed?
Answer: A department should create an Accounts Receivable entry when they have earned revenue in the current fiscal year and payment for that revenue will not be received until the following fiscal year.
Accounts Receivable Example - Expense Accrual Entry:
When is an Expense Accrual Entry needed?
Answer: A department should create an Expense Accrual entry when they have incurred an expense for the current fiscal year and the expense will not be paid prior to June 30th. If you have an expense that crosses fiscal years, such as a catering expense that covers June 29th through July 2nd, you would process an accrual for 50% of the invoice to capture 2/4 days that took place in the current fiscal year.
Expense Accrual Example - Revenue Deferral Entry:
When is a Revenue Deferral Entry needed?
Answer: If your department has received and deposited revenue in the form of a cash, check, or credit that relates to a program, event, course, etc. that is for next fiscal year, that revenue needs to be deferred until the next fiscal year. This is to ensure that revenue is not overstated in the current fiscal and that the revenue and expenses are recorded in the same fiscal year.
Revenue Deferral Example