Prepaid Expenses

Some expenses, such as subscriptions and employee travel, will have a different accounting recognition date than the transaction date when the expense was incurred. For these expenses, Abacus will process them as of the transaction date and sync to your accounting software. At the end of the accounting period, adjusting entries will be required to account for these prepaid expenses. For instances where these expenses are most often prepayments, it is helpful to link their Abacus category to your related GL prepaid expense code.

For example, employee travel is often booked and travelled in differing accounting periods. For these prepayments, you can map your travel categories with a prepaid expense asset line in your GL.

Once the travel takes place and needs to be recognized as an incurred expense, an adjusting entry will be required to record the expense properly. To record the adjusting entry, debit the related, actual expense account (e.g. Employee Airfare) to denote the expense recognition, and credit the asset account (Prepaid Expenses) to reduce its outstanding balance.