@ Eric : -- That is my problem today. Those modules are great but rely on the default AR account which is incorrect in my opinion. This is not a technical issue (actually Guewen answered perfectly the technical question) but an accounting/SOP issue --
FYI you cannot accuse me to be too technical... I am not a developper ! actually I have an account background :) Joke appart, to sum up my message below : do not create a prepayment account instead of using the usual AP/AR accounts. I used MG comments to explain my point : Hello > Pre-payments transactions differ from cut-off issues! > No. Be careful to accounting terminology. Let clarify what I mean with that example found on the web here : http://www.accountingcoach.com/blog/prepaid-expense). I rephrased it to simply : *01-dec *: you pay your next 6 months insurance for 6000 $ -> debit 'Prepayment account' - credit 'Bank account' for 6000$ (note that there are no expense recorded in my books at this stage) *31-dec* : as it is the last day of your fiscal year, you want to exclude 5 months paid but related to the next fiscal year -> Debit 'Insurance expense account' - credit 'Prepayment account' for 1000$ (*this is a cut-off entry*-> I record an expense of 1000$ on my current fiscal year) *01-jan* : I reverse my cut-off enty -> debit 'Prepayment account' - credit 'Insurance expense account' for 1000$ *01-mar* : imagine that I receive my insurance invoice that day -> debit 'Insurance expense account' - credit 'Prepayment account' for 6000$ > > A prepayment is made at the request of a partner as a necessary condition > for him to deliver the service or the product; as such it is recognized in > the books as a payment in advance (for an invoice to be received); it is > usual to receive a pro-forma invoice (for ecommerce the transaction amount > is either sent by email or just stated on a web page (that can be printed > offline). > I found this stated on some website as well but again be carefull with this is partially wrong. 1st point - a pro-forma invoice is not a legal document that you cannot use in your books. So, the accounting entry to be recorded is a basic payment -> debit 'payable account' - credit 'bank account' (if you pay money to a supplier) OR debit 'bank account' - credit 'receivable account' (if you receive money from a customer). 2nd point : if you recevable money from a customer for some goods you have delivered and that you have not invoiced yet you do not have to use a prepaid account ... you have to use instead the usual receivable account. Conclusion : a prepaid account must be use for cut-off purpose in order the fullfill the segregation of period principle when you paid something that must must linked to a other fiscal year .....but not to record any payment that you receive or you pay before the invoice booking like a simple goods delevery. Hope this clarify my point. Frederic
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