UK Quick question

[Claire1989]

Hi there
I have expense invoices that have come in for the business dated for 30 December 2020. The services relate to 2021 wholly, and the invoice was not paid by us until middle of Jan 2021.

Year end is 31 December 2020

How should i treat this in the 2020 accounts?


Thanks for your thoughts.

 

[onebadasset]

Should be expensed out in Dec, and shown in A/P

 

[hirschcogmail.com]

Hi there
I have expense invoices that have come in for the business dated for 30 December 2020. The services relate to 2021 wholly, and the invoice was not paid by us until middle of Jan 2021.

Year end is 31 December 2020

How should i treat this in the 2020 accounts?


Thanks for your thoughts.

Hi
According to HMRC all business should operate the accrual system ie the invoices should be posted when received and not when paid.
This is what we do for clients.

Kind regards

 

[kirby]

Well, let's explore that.
The rule I am familiar with for accrual accounting is to post expenses when incurred. Not just when the invoice is received.
Some lease and mortgage companies issue a whole book of invoices to be used for future payments. If the above is true," post when invoice received", then you would post many years worth of invoices upon receipt into the month you received those invoices. Which is logically incorrect.

Then again, I am speaking of US GAAP. So, "posting invoice when received" might well be the UK rule.
"England and America are two countries separated by a common language."

 

[onebadasset]

Should be expensed out in Dec, and shown in A/P

I apologize, I misread your question. I thought it was 2020 expenses where the invoice was received and paid in 2021.