Accruals are adjustments for revenue that has been earned but is not yet posted to the general ledger accounts, and expenses that have been incurred but are not yet posted to the general ledger accounts. Year-end accruals are adjusting entries to make sure revenue and expenses are recorded in the correct fiscal year.
A revenue accrual does not need to be made if an accounts receivable entry has already been recorded. If cash is received on or after July 1 for revenue that was not recorded in the current fiscal year, please process a revenue accrual. An expense accrual should be made for goods or services provided where the expenditure has not been recorded. Remember an encumbrance is not an expense.
Please reference the KFS Payment Processing E-docs page for specific instructions on the timing for PREQ, DV and PCDO.
There are two year-end accrual object codes (OC). These object codes should only be used at year-end and reversed in July (of the following fiscal year).
Below is an example of revenue and expense year-end accruals. If using the Year End Distribution of Income and Expense (YEDI) e-doc, enter the entries in the To section and the From section for the reversing entry.
|Revenue Year-End Accrual||Expense Year-End Accrual|
|DR OC 1999 Year End - Accrued Income||DR OC 6xxx Expense|
|CR OC 4xxx Revenue||CR OC 2999 Year End - Accrued Expense|
Year-end accruals can be posted on two different e-docs, an Auxiliary Voucher (AV) or YEDI. The correct e-doc to use will depend on when the entry is posted.
The advantage of using the AV is that it can be scheduled to auto reverse in the next fiscal year. If a YEDI is used, a second entry must be posted in the next fiscal year to reverse the accrual. The reversing entry should be posted in period one (P1) using a Distribution of Income and Expense (DI) e-doc. If a YEDI is used, it is strongly recommended that both entries, the accrual and the reversal, be created at the same time.
Please reference the table below for a summary of which e-doc to use and when, and how to use them.
|AV - On or Before the AV Deadline (P12)||YEDI After the AV Deadline (P13)|
Select June from the accounting period drop-down.
Select Auxiliary Voucher type - Accrual.
Enter a reversal date of today, or July 1, or current date, whichever is later.
The AV will automatically reverse in the next fiscal year on the date selected. Do not schedule year-end accruals to reverse later than July 31.
Revenue accrual entry:
DR OC 1999 Year End - Accrued Income
Expense accrual entry:
DR OC 6xxx operating expense
The entry will auto-reverse in the next fiscal year!
Revenue Accrual Entry:
To section: DR OC 1999 Year End - Accrued Income
Expense Accrual Entry:
To section: DR OC 6xxx Expense
Reverse the YEDI in P1:
Reverse the revenue accrual:
From section: DR OC 1999 Year End - Accrued Income
Reverse the expense accrual:
From section: DR OC 6xxx operating expense