Hi Adrien, I am assuming here you mean when you are pre-billed by a supplier of a good or service. What follows is not necessarily restricted to insurance or even to prepayment but just uses these to illustrate the principle. If you mean that you are pre-billing a client, my apologies and please ignore.
I think the issue is not that there is a single event associated with things like prepayments but that there are multiple events. If one wishes to meet the full requirement to provide an accurate reflection of events in your accounts, for example to handle the issue of pre-billing of insurance for a future accounting period you have (at least) the following events which you record in your accounts as they occur unless of course regulations/legislation specifies otherwise. 1. Insurer issues an invoice to you. You have no knowledge of this until you receive it. This doesn't appear in your accounts. 2. You receive an invoice from the insurer. It will specify a due date and terms and conditions, possibly a discount if paid in advance or interest if not paid by the due date and an amount to be paid at a future date. You raise a Bill in your accounts. I would choose the date you receive the invoice from the insurer as the post date as this is when you become aware of the obligation to make that future payment and receive in return insurance cover for an agreed period, which may or may not be from the due date even though it generally is. You would record the bill with a debit to an Asset:PrepaidInsurance account and a corresponding credit to Liability:A/P created by posting the bill. You could equally use the date on the invoice issued by the insurer/supplier, unless there is a significant difference between the date it was issued and the date you received it, but the latter is really the most significant event associated with the bill for your accounts. (Dates on line items in the invoice from a general supplier to you may be relevant however if you are matching a particular expense to specific items of revenue of course). 3. You pay the Bill at or before the due date. (Ignore the discount possibility.) Again I would use the date I raised a cheque, authorised a transfer from my account, handed over cash etc. depending on how I paid the bill. In the case of a cheque or where there may be a significant delay in an electronic funds transfer after you have authorised it, you may use a temporary clearing account to record that you have made the payment and then clear that account when the funds are actually transferred (cheque cleared or electronic transfer from your account recorded if this level of detail is of importance to you). In the simplest form this would be a credit to your Asset:Bank account and a debit to the Liability:A/P at the date you made the payment. 4. The final step would be to expense the prepayment at periodic times during the period of the insurance with a credit to Asset:PrepaidInsurance and a debit to Expense:Insurance. By capitalising the insurance prepayment, it can be carried through over into a future accounting period and expensed in that period. I am not sure what you meant by "My issue isn’t the idea of a pre-paid asset, my issue is that it is increasing when I post the bill, not when I pay it." I guess you mean the A/P balance by it or do you mean the Expense account (or an Asset account if it is prepaid). If it is the A/P balance, then that is the correct expected behavior as Derek has pointed out. If the posting date is not relevant to matching particular income then capitalising it to an asset account then expensing it at the relevant date wil do the trick. Next issue is whether the asset account should be under current assets, if it is to be expensed within the current period or in non-current assets where it is to be expensed in a succeeding period. ----- David Cousens -- Sent from: http://gnucash.1415818.n4.nabble.com/GnuCash-User-f1415819.html _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
