Using Accruals

The following examples describe the accrual process and rounding issues associated with accruals. These examples are based on US Currency.

Original Entry

The following table displays the transaction entry lines for a payroll check. This check is for the amount of $0.04 and needs to have an accrual applied to it. For simplicity, GL is the only segment included in the following example.

Table A
GL Type DR CR Entry Type Effective Date Description
11000 CSH   0.04 Normal 11/3/2015 Cash
50003 EXP 0.04   Normal 11/3/2015 Bonus Exp

Prior to Transferring or Pre-transferring data to Accounting, you must have:

  • Entered timesheets (Timesheets>Enter Regular/Supplemental Timesheets),
  • Printed and reviewed timesheets,
  • Calculated Payroll (Activities>Payroll>Calculate Payroll),
  • Set Up an accrual account (As the Administrator, access Organization>Set Up Modules>Payroll), and
  • Printed checks and/or vouchers (Activities>Payroll>Print/Email Checks and Vouchers).

Transfer to Accounting Table

Now, we need to transfer the check to Accounting. The following table displays the processing group code for the check. Note that the amount of $0.04 needs to be split between the accrual (20%) and check (80%).

Table B
  Group Code Pay Date Check Date Check % Accrual Date Accrual %
Admin 11/03/15 11/03/15 080.0000 10/31/15 020.0000

Accrual Entry

Now, apply the 20/80 percentages from Table B. After completing the Transfer to Accounting form, click the Pre-Transfer or Transfer buttons to generate accruals. During the generation of accrual entries, the system uses the original entry (Table A), and splits it into separate entries as shown in the table below:

  1. The system takes each line of the original entry and distributes it to the Accrual % first, then the Check % (see the table below). You entered these percentages on the Transfer to Accounting form (Table B).

    2. The accrual distribution is calculated by multiplying $0.04 by 20%. Similarly, the check distribution is calculated by multiplying $0.04 by 80%. Note that the system rounds the credits and debits. See Rounding Accruals for more information.

    GL Type DR CR Effective Date Description
    11000 CSH   0.01 10/31/15 Accrual Distribution
    11000 CSH   0.03 11/03/15 Check Distribution
    50003 EXP 0.01   10/31/15 Accrual Distribution
    50003 EXP 0.03   11/03/15 Check Distribution
  2. Next, the system replaces the Cash (CSH) transaction lines of the original entry with the Accrual payable account (such as APO and OL) that the Administrator created using the Organization>Set Up Modules>Payroll form. Now you have two entries to accounting—one for the accrual date and one for the check date, both of which are found in Table B. The cash account is temporarily removed from the calculation in this step; however, it is added back in the next step.
    3. GL Type DR CR Effective Date

    11000

    21001

    CSH

    OL

    		  0.01 10/31/15

    11000

    21001

    CSH

    OL

    		  0.03 11/03/15
    50003 EXP 0.01   10/31/15
    50003 EXP 0.03   11/03/15
  3. Add the original Cash transaction lines from the original entry (row 1 in Table A). Then, add another transaction line by reversing the cash entry and changing it to the accrual account. Both lines use the Check Date from Table B.
    4.   GL Type DR CR Effective Date
    Add 11000 CSH   0.04 11/03/15
    Rev 21001 OL 0.04   11/03/15
      21001 OL   0.01 10/31/15
      21001 OL   0.03 11/03/15
      50003 EXP 0.01   10/31/15
      50003 EXP 0.03   11/03/15
  4. The last step is to combine all transaction lines that have the same GL Code and Effective Date. You need to net all current accrual entries (OL) with the same effective date into a single entry with a debit of $0.01.
    5.   GL Type DR CR Effective Date
      11000 CSH   0.04 11/03/15
      21001 OL   0.01 10/31/15
    Combine 21001 OL 0.04   11/03/15
    Combine 21001 OL   0.03 11/03/15
      50003 EXP 0.01   10/31/15
      50003 EXP 0.03   11/03/15
  5. Your final entry looks like the following table:
    6. GL Type DR CR Effective Date
    11000 CSH   0.04 11/03/15
    21001 OL   0.01 10/31/15
    21001 OL 0.01   11/03/15
    50003 EXP 0.01   10/31/15
    50003 EXP 0.03   11/03/15