Prepaid expenses and categories
When you pay for several months in advance, such as a year's rent or an insurance policy, the payment is not an expense yet. Fiscal keeps it on a prepaid account and moves one month's share to expense each month.
Prepaid expenses are in every plan. Find them under Prepaid Expenses in the menu: the register, Run Amortisation, the categories and the reports.
How it works
- The payment is posted to a prepaid account (an asset account such as Prepaid Expenses) instead of an expense account. You do that on the bill, expense or journal voucher as usual, or let Fiscal post it when you enter the prepaid expense manually.
- You register the prepaid expense: the amount, the start date and the number of months. Fiscal builds its monthly schedule.
- Each month, Run Amortisation posts that month's share: Dr Expense / Cr Prepaid.
- When the last month is posted, the prepaid account is back to zero for it and its status is Fully Used.
Example: on 1 January you pay 12,000 rent for the year. The bill goes to Prepaid Rent. You register a prepaid expense of 12,000 over 12 months, and each month 1,000 moves from Prepaid Rent to Rent Expense.
Prepaid categories
A category holds the accounts and defaults for one kind of advance payment, for example Prepaid Rent, Insurance or Subscriptions. Open Prepaid Expenses›Prepaid Categories and click New Category.
| Field | What it does |
|---|---|
| Name | Must be different from every fixed asset category name too. |
| Prepaid Account | The asset account the payment sits on until it is used. Each month is credited to it. |
| Expense Account | Where each month's share goes. It must be different from the prepaid account. |
| Default Months | The usual number of months, for example 12. You can change it on each prepaid expense. |
| First Month | By days from the start date charges a part month for the days left; Full month charges the start month in full; From next month starts the month after. |
| Loss on Early End / Gain on Refund | Optional. Used when a prepaid expense ends early or is refunded (see Changing, extending or ending a prepaid expense). When they are empty, the difference goes to the expense account. |
Changing a category only affects prepaid expenses added afterwards. A category in use can't be deleted; mark it inactive instead.
Who can use it
The Prepaid Expenses right in the user group covers the categories, the register, adding and changing value, ending early and the reports. Running and undoing the monthly amortisation uses the Run Depreciation right, the same as fixed assets (see User groups and rights).