This may be a dumb question, but I need to ask it anways. My company prepares its financial statements on an accrual basis. I am in the process of setting cutoff dates, but I just thought of something I wasn't sure how to handle. How do you account for items that come in after the cutoff date? For example, we have some expenses that are reimbursable from the client. We record the expenses when they are incurred and record the invoices related to those expenses as income.
I think I just answered my own question and now I feel dumb.
When we invoice the expenses, they will show as income, so as long as the invoice is recorded in the month of the expense, we should have comparative, matching financial statements. Am I correct?
For future situations... how do you handle prior month expenses after the cutoff date to ensure they are recorded in the proper month?
I think I just answered my own question and now I feel dumb.
When we invoice the expenses, they will show as income, so as long as the invoice is recorded in the month of the expense, we should have comparative, matching financial statements. Am I correct?
For future situations... how do you handle prior month expenses after the cutoff date to ensure they are recorded in the proper month?