Use of Revenue Accruals

Revenue Accruals are used to recognise revenue from goods or services earned but not yet invoiced in a period. This allows accounts to more accurately reflect both revenues earned, and the expenses incurred in generating that revenue in a given period. Adjusting period values using revenue accruals automatically creates a reversing Journal on the first day of the next period. 

Examples

Revenue Accruals include:

• Work in Progress like services rendered but not yet billed to the Customer where you expect payment at a later stage. 
• Goods sold not yet invoiced, like goods dispatched or partial deliveries.
• Utility costs invoiced bi-monthly in arrears.

See:

Revenue Accruals (7.3) - AIQ Academy

Step One: Create a Revenue Accrual Group (Optional)

First, follow the instructions for creating a group in Managing General Ledger Accounts. This will give further reporting power.

Step Two: Set up a GL Account for Revenue Accrual

The standard GL Chart of Accounts includes a single Revenue Accrual Account (7250) to but you can add as many other Revenue accrual accounts as fits your needs. 

Setting up an accrual account follows the same steps as a standard General Ledger Account. See Managing General Ledger Accounts for more details. Assigning a Group will let you query them in the GL Accounts listing grid. 

Step Three: Assign the GL Account as a Revenue Accrual Account

1. Go to Setup > Codes Maintenance.
2.  Select System Accounts and click Add New System Account.
3. In the Account Type dropdown, select Revenue Accrual Account.
4. In the Linked GL Account field, enter the GL Code of the GL Revenue Accrual Account which you set up previously.
5. Click Save.

1. Go to General Ledger > Actions > Revenue Accrual.
   
2. Enter details of the Accrual as follows:
   • Revenue Accrual Account:  Choose one of the System Revenue Accrual accounts from the dropdown.
   • Description: Enter a Description for the Revenue Accrual.
   • Default Description to each line:  If ticked, this will use the Description entered in the previous field for each line entered below.
   • Journal Reference: Enter a unique Reference Code for the Revenue Accrual.
   • Date: Enter the date of the Revenue Accrual. This date dictates which financial period the accrual will be posted to. The auto-reversing entry of the journal will be posted to the first day of the following financial period.
   • GL Account: Select the Revenue Accrual General Ledger income account code from the dropdown.
   • Dimension Tag: If the transaction will have a specific Dimension Tag, select from the list of those available here. If the related General Ledger Account Code is flagged as Use Dimension Tag, the system will force the user to enter a Dimension Tag against the transaction.
   • Line Description: Enter a description for each line or override the inherited Description from the Journal Header.
   • CR Amount: In the relevant field enter the Credit value. The system will automatically post the debit amount to the Revenue Accrual Account.
3.  Click Process to post the Revenue Accrual.

In the GL Journal Manager, select “Revenue Accruals” from the Journal Type dropdown.

Perform the following:

• View and Edit Transaction Details: Click on the relevant transaction code. If available, click on the pencil icon. You can change the date, GL Code, amount, and BI Code. Click Process Edits. The accrual and reversal will update simultaneously. You can view details of any changed in the Change Log tab.
• Copy Accruals: If you need to post a further Accrual in the following period, for example for on-going Work in Progress before Customer Billing, you can recall and re-use a previous Revenue Accrual Journal. In the Actions dropdown, select Copy. Change the Reference Code, Dates and Amounts before clocking Process.