Accrual/Deferral Posting

[Former Member]

Dear all,

In SAP, Accrual/Deferral is used to spread an expense or revenue to each month after/before receiving an invoice. My scenario is: For each year, I must pay an invoice for insurance premium from the beginning of year. But I want to spread this expense to 12 months and post it at the beginning of each month. How should I use accrual/deferral in this case ? Why each accrual/deferral document must be reversed ?

Thank you very much for your help.

Sylvecat.

[Former Member]

Sylvecat,

In your case, a recurring entry would be the right choice. Assuming you would have debited a Insurance Prepaid a/c (Asset) when the invoice was paid at the beginning of the year, you want to charge the Insurance expense a/c every month with the monthly installment. You have to create a recurring entry valid for a year debiting Ins.exp. and credit the Ins. prepaid. This will progressively debit the expenses every month and zero out the prepaid a/c at the end of the year.

This recurring entry need not / should not be reversed every month.

Thanks

Jagdish