Accrual Schedules

Accruals can be posted to an accrual plan through two different methods. The most common method is through actual sales or purchase transactions. An example of this is a sales rebate that is set up for a particular customer and item. When a sales order is entered for that customer and item, an accrual amount is calculated, then posted to the accrual plan.

It is also possible to accrue predetermined amounts to an accrual plan according to a defined schedule. This can be preferable in situations in which actual transaction information is not known. For example, you might have a marketing program with a company that resells your items, where for every one of your items they sell, you will accrue and ultimately pay back a predetermined amount. Because there is no way to directly enter actual transaction information as it occurs, you can set up an accrual schedule to accrue amounts over a specified period of time.

Estimated Accrual Amounts

An estimated accrual amount can be determined for a particular accrual plan. An accrual estimate is calculated from two sources:

• When an item is entered on an accrual plan line, an estimated quantity can be entered, as well. The program determines an estimated accrual amount by using the accrual calculation method that has been defined for the item. For example, if you assign an item to an accrual plan with an accrual calculation method of $0.50 per unit sold and an estimated quantity of 1,000 units, the program will calculate an estimated accrual amount of $500 for that item.
• Accrual charges can be assigned to an accrual plan. Accrual charges represent additional costs that you want to associate with an accrual plan. If you create an accrual plan for a sales rebate program, you might have accrual charges for different types of marketing expenses and promotions tied to that program.

The sum of an accrual plan's estimated accrual amounts from accrual lines and accrual charges is the accrual plan's total estimated accrual amount.

Accrual Schedules

An accrual schedule is set up for a specific accrual plan. While you can manually enter the date and amount for each accrual that is a part of a schedule, it may be easier to instruct the program to automatically generate an accrual schedule based on an accrual plan's total estimated accrual amount.

When you indicate that you want to use an accrual schedule for an accrual plan, that plan's accrual posting level changes from the default document line setting. You can not post accruals that are based on actual transactions to an accrual plan if the plan has an active accrual schedule.

Payments

It is also possible to set up a payment schedule for an accrual plan. As with accrual schedules, a payment schedule can be based on an accrual plan's total estimated accrual amount.

You do not have to create a payment schedule for an accrual plan with a defined accrual schedule. It may be that you want to manually distribute payments from a scheduled accrual amount. In addition, payments are sometimes taken against an accrual plan in the form of deductions.

Reconciliation

When accruals are based on actual transactions, the accrual amounts that are posted to that plan are accurate. This may not be true when accruals are based on a defined accrual schedule. For example, you might create an accrual schedule based on an estimate that 1,000 units of an item will be sold. When the marketing program is over, you discover that 1,100 units were sold.

In the general journal, you can enter a line for a specific accrual plan account, as well as a balancing account. In this way, you can make a direct posting to an accrual plan. This allows you to adjust the total accrual amount for a particular plan.

You can also use the general journal to make adjustments to the payment amount for an accrual.