Understand the idea
If you pay 12,000 for a year of insurance, that amount does not belong to the month you paid. It stays an asset on the balance sheet and turns into expense at 1,000 a month, so each month shows the right result. Deferred revenue is the opposite: you collect before you deliver, so the amount stays a liability and then turns into revenue.
- Pay or invoice
- Balance sheet
- Monthly release
- Expense or revenue
First book the amount to a balance-sheet account
| Account | Debit | Credit |
|---|---|---|
| Prepaid expenses | 12,000.00 | |
| Bank | 12,000.00 |
Create the schedule
In the side menu choose Deferred & prepaid, then New schedule. If the amount is on a document line, pick it under From a document line and the details fill in. Otherwise stay on the manual option and enter:
- Kind (1): Prepaid expense or Deferred revenue.
- Total amount, Months and First month.
- Balance-sheet account (2): where the amount was booked.
- Released into (3): the expense or revenue account.
Follow the monthly posting
Instalments that are due post every night at 05:15, each dated the last day of its month. Do not want to wait? Press Post due now on the schedule row.
At the top are three figures: Opening, Recognised and Remaining. Press a schedule to see its months and the journal for each. If a schedule stops, the reason appears after Blocked, most often a closed month.
| Account | Debit | Credit |
|---|---|---|
| Insurance expense | 1,000.00 | |
| Prepaid expenses | 1,000.00 |