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Former Member

Accural/Deferral Procedure for Fixed deposits

I am using product type 51A i.e. fixed term deposit.

There are two methods for Accrual/deferrals to calculate:

1. Reset Procedure: Which reverse the cumulative accrual next day.

2. Difference Procedure: This will not reverse the accrual entry next day but it will also calculate the accrual amount cumulatively.

For e.g;

FD: 100000 Rupees

Interest rate: 12%

Period: 01.01.2017 to 01.01.2018

Accural/Deferral Procedure for Fixed deposits

Accrual calculation and entries as per Reset procedure:

On 31st January 2017: Accrual entry

100000*1/12*12/100=1000

Entry would be :

Interest accrued but not due A/c Dr 1000

Interest Income on FD A/C CR 1000

On next day it would get reverse: i.e. on 01.02.2017

Interest Income on FD A/C CR 1000

Interest accrued but not due A/c Dr 1000

on 28.02.2017: Accrual Entry:

100000*2/12*12/100=2000

Entry would be :

Interest accrued but not due A/c Dr 2000

Interest Income on FD A/C CR 2000

On next day it would get reverse: i.e. on 01.03.2017

Interest Income on FD A/C CR 2000

Interest accrued but not due A/c Dr 2000

And so on.....

Accrual calculation and entries as per difference procedure:

On 31st January 2017:Accrual entry

100000*1/12*12/100=1000

Entry would be :

Interest accrued but not due A/c Dr 1000

Interest Income on FD A/C CR 1000

It would not reverse the entry on next day....

on 28.02.2017: Accrual Entry:

100000*2/12*12/100=2000

Entry would be:

Interest accrued but not due A/c Dr 2000

Interest Income on FD A/C CR 2000

This means in difference procedure also system calculates the Accrued Interest cumulatively; it’s just it does not reverse the entry next day.

In difference procedure there are various methods for calculation, like Linear and Pro rate which I have tried but its calculating the accrual cumulatively only.

So is there any possibility by which I cant post my accrual monthly only because system is calculating accrual amount cumulatively only in both scenarios i.e. in reset procedure and in difference procedure.

Kindly help on this, Need to go for soon implementation.

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3 Answers

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    Former Member
    Apr 29 at 05:20 AM

    Kindly help on this above issue, Need to go for soon implementation.

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    Former Member
    Apr 30 at 08:16 AM

    Hi Srinivas, is your accounting entries are correct in both case ?

    Interest accrued but not due A/c Dr 2000

    Interest Income on FD A/C CR 2000

    On next day it would get reverse: i.e. on 01.03.2017

    Interest Income on FD A/C CR 2000

    Interest accrued but not due A/c Dr 2000

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    Former Member
    Apr 30 at 10:39 AM

    Thanks for response rajen.

    I don't want to reverse next day...as per client requirement we need to show them only for month ends.

    For example: month end on 01/31/2017 and next reflect accrual date is 28/02/2017 only and there is no reset procedure.

    please assist on this.


    Thanks

    Srinivas

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