Dealing with a liability account.

[Syed Azmat]

I recently got into the position of reporting of a profit centre. Balance sheets are not normally prepared with discipline at each quarter at the company I work at. The internal auditors recently came to me regarding the query for an account named 'Unapplied Receipts'... I have asked the people, previously involved in preparing accounts, regarding its treatment.
What I have understood so far is that the Oracle system generates this account in relation to receipt which is not yet identified (its origin)
, so the correspodng debit entry is probably cash account.
How should I handle this ?

 

[kirby]

Yes, by the name of the account - you received cash and since there was not enough info to know where to post the credit it was posted to the "unapplied receipts" account. That is supposed to be a temporary thing, however. As a standard, allow no more than two days for amounts to sit there. Sooner if the amounts are large. Next, amounts clear from there as a result of research so that must be someone's job. Find who that is and make them issue a weekly or month report that shows the age of the items in the account.

 

[bklynboy]

Many different names for this such as supense, clearing, etc. Generally since you segregate the responsibility of cash and accounting, there are times where amounts get processed through cash but accounting or the system feed does not knwo where to post to. They end up as unapplied because a true balance sheet or P&L account has not been hit. Reconciliation area generally investigates and once uncovered clears this account against the natural account.

Kirby is right - these are supposed to be temporary and cleared fairly quickly. We do track these daily and send reports around to ensure they get the attention they deserve.