Prepaid expenses
A prepaid expense is something you pay for in advance, such as a year of insurance, a software licence or several months’ rent. On the day you pay, the money has not been “used up” yet, so it sits on the Balance Sheet as an asset. Each month, the portion you have used becomes an expense. Moving it across month by month is called amortization.
Bokapsys builds the monthly schedule for you and posts each month’s expense. You find it under Accounting → Allocation Schedules → Prepaid Amortization.
Before you start
Section titled “Before you start”- You need a role with access to allocation schedules. See Team and roles.
- In your Chart of Accounts, you need an expense account on the Income Statement (for example Insurance) and a prepaid asset account on the Balance Sheet.
- Record the payment itself as you normally would. Usually it arrives with your bank statements; classify it to the prepaid asset account rather than to an expense, so it is not counted twice.
Create a prepaid schedule
Section titled “Create a prepaid schedule”- Click New schedule.
- Under Prepaid expense details, enter a Description (for example Annual insurance premium) and choose a Category: Insurance, Rent, Software Licenses, Maintenance Contracts, Subscriptions, Advertising or Other.
- Enter the Payment date, the Prepaid amount, the Duration (months) and the Amortization start date.
- Under GL accounts, choose the Expense account (I/S) and the Prepaid asset account (B/S). Both are required.
- Click Calculate preview to see each month’s Amortization, the Accumulated total and what is Remaining.
- Click Save schedule.
Bokapsys spreads the amount evenly: the prepaid amount divided by the number of months.
Post amortization
Section titled “Post amortization”Each month’s entry debits the expense account and credits the prepaid asset account, so the asset shrinks as the expense is recognised. An entry is posted only once its date has arrived.
How due entries reach your books depends on your posting settings. On Auto-post Bokapsys posts them for you; on Manual, use the banner’s View pending and Post Now. Entries in a closed accounting period wait until the period is reopened.
Manage saved schedules
Section titled “Manage saved schedules”The Saved schedules list shows each prepaid item with its amount, duration, start date and status. On each row you can:
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View the full schedule and which months are posted, and Download PDF.
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Edit the description, category or accounts. New postings use the new accounts. To change the amount, duration or start date, void the schedule and create a new one.
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Void the schedule. Any months already posted are reversed with new entries; nothing is deleted.