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Former Member
Sep 13, 2007 at 02:10 PM

Accruals

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6. Do companies use Accrual in CO or in FI? If CO accrual, then how the difference between actual lump sum expense in FI and accrual via CO is shown as current asset?

Or, we only use CO accrual for payroll related accruals. but not for rent and other pre-paid expenses. What I am referring to is, suppose we pay $1200 in Jan for the whole year's rent.

At Jan end, I have $100 expense and $1100 as current asset in the form or prepaid rent balance. So, would this accrual of rent expense be done in CO or best handled via a recurring entry in FI (I think one should debit prepaid rent B/S account and credit cash when $1200 is paid then every month a recurring entry to debit rent expense and credit prepaid rent b/s account.) It's confusing when sap says lumpsum expenses distort the picture in CO, while, you'd normally not record a lumpsum expense as expense. Instead you'd do what I said above. The lumpsum payment goes to a prepaid account not to expense account.