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Periodic Jourmnal Vs Accrual Schema

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Posted on by Community Member Microsoft Employee

Hi I have paid say , Advance rent for 6 months to my landlord.

I have paid say , Advance rent for 6 months to my landlord. Say i paid $60,000.

Now shall to allocate

per month - $10,000

we should use

(i) Periodic Journal or

(ii) Accrual Scheme option

If answer is Accrual scheme , then please elaborate also why not periodic journal .. vice versa

Thanks

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Answers (2)

Community Member Microsoft Employee on at

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RE: Periodic Jourmnal Vs Accrual Schema

Hi Ludwig,

The way we would use Periodic Journals would be to Credit the balance sheet account (prepayments) and debit the P+L/Cost account, your double entry/TB is always correct. Using the periodic journals would allow you to post this journal every month/period. It works in the same way but allows you to have control over what is posted essentially using it as a recurring template.

Agree, however, that the standard Accruals Scheme is the standard way to do it
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Ludwig Reinhard Microsoft Employee on at

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RE: Periodic Jourmnal Vs Accrual Schema

Hi Bruce,

I agree with Ashok that accruals are the right instrument for this scenario. That is because you have made a payment for expenses that arise in future periods. For that reason, you need to show a position in your Balance Sheet for accrued expenses which cannot be realized with periodic journals in the same way accountants need to have that.

Best regards,

Ludwig
Community Member Microsoft Employee on at

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RE: Periodic Jourmnal Vs Accrual Schema

I'm not really a big fan of the accruals schema but it's probably the best system led accruals process in AX for what you are looking for - the periodic journal could also be used, however. We currently use an upload to move costs from prepayments to the cost account at a period end as the accruals scheme really didn't work for us in practice.
Community Member Microsoft Employee on at

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RE: Periodic Jourmnal Vs Accrual Schema

I used the same link to understand

But not getting clarity
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Ashok Bishnoi 185 on at

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RE: Periodic Jourmnal Vs Accrual Schema

There are set of entries generated, I will suggest to follow the blog written on the below link for complete setups and accounting entries:

vsdynamicsfinance.wordpress.com/.../setup-accrual-schemes
Community Member Microsoft Employee on at

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RE: Periodic Jourmnal Vs Accrual Schema

What will be the enteries in accrual schemes ? (In the system)

If u can mention those journal enteries , it will make job easier.
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Ashok Bishnoi 185 on at

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RE: Periodic Jourmnal Vs Accrual Schema

Hi Dhruv,

For the above mentioned scenario you shall use Accrual Schemes.

Why Accrual Schemes or why not Periodic Journal? This can be understood if we know the major difference between them. Basically Periodic Journal is used when similar kind of transactions happens again and again may be weekly, monthly or quarterly etc. so we use the periodic journal as we can copy all the details from the earlier saved journal and just make the necessary changes such as in amount or description etc. An example for this could be staff expenses which are paid in each month but amount may differ.

While Accrual Schemes are used when we want the expenses and revenues should be recognized in the period they occur. In your example, you have already paid the full amount in the current month which needs to be accounted but the whole amount doesn't belongs to the current month so needs to be allocated partially in each coming month for 5 months. As both full payment which is already paid needs to be accounted as well as that amount shall be properly accounted in the months they are actually recognized we use Accrual Schemes.

I hope this will help to clear your doubts.

Thanks and regards,

Ashok