Expense GL Accounts and Journal Entries
General Ledger Accounts
New default GL accounts are set up for a contract and other cost recognition with the following account types:
| Account Number | Account Name | Account Type |
|---|---|---|
| 6000 | Expense Clearing (EC) | Expense Clearing |
| 1000 | Deferred Expense (DE) | Deferred Expense |
| 5000 | Expense Recognized (ER) | Expense Recognized |
Expense Deferral & Recognition
Whenever a Contract Cost or Other Cost is added, RevRec books the following entry and establishes a deferred cost:
| Account | Debit | Credit |
|---|---|---|
| Deferred Expense | XXX | |
| Expense Clearing | XXX |
If the Amortization method is selected as “Point in Time”, then RevRec recognizes the entire amount in the current period. If the amortization method is “Ratable” then RevRec capitalizes the cost over the life of the asset and amortizes it for each period. RevRec books the following entry to recognize the expense:
| Account | Debit | Credit |
|---|---|---|
| Expense Recognised | XXX | |
| Deferred Expense | XXX |
General Ledger Account Mapping
RevRec’s expense recognition feature comes equipped with the default GL mapping – one account for each account type. For example, a single deferred expense and expense amortization account for the company.
RevRec also allows you to edit the mapping based on your accounting system accounts. For more complex setups you can use other fields such as Product Type, department, class, location, or a different custom field to map entries to specific accounts, similar to revenue.
Journal Posting
Journal entries for expense-related transactions can either be posted manually or directly to an integrated third-party accounting system, provided that you have integrated one with RevRec. Ensure that the account names are consistent between the accounting system and RevRec.
Updated on: 06/07/2022
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