Unless you really need to do accrual accounting, then don't. If you are
never getting it back, it is not much of an asset.
Put it though as Insurance Expense, Initial Payment, Payment 2 etc.
Accounting is there to help you, not make more work to make it "correct".
On 16/12/18 7:06 am, tbalaban wrote:
My Company pays an initial payment to our insurer at the beginning of each
policy year. As we incur insurance costs based on event participants, that
initial payment is charged. After it is exhausted we get a monthly bill for
the amount due. In no case do we ever get the initial payment back.
I'd like to treat the initial payment as a credit to insurer's A/P account
then each month create a bill for the amount payable.
Is this the correct way to handle such a transaction?
Assuming it is, how do I credit the amount due from whatever account I
posted the initial payment to?
In practice we pay the initial payment in February, the start of our paolicy
year. Usually, in April or May, the initial payment is exhaused and we have
to send more money to pay that month's bill. I'm not at all clear on how to
post this situation.
I'd appreciate knowing how to do this in GNUCash as well as any comments on
the applicable general accounting rules. In Quickbooks I could debit or
credit A/R or A/P diectly and selects the customer or vendor required. Since
that capabiity does not appear to be available in GNUCash, how do I post it?
Many thanks for your already generous help.
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