‘Recurring General Journals’ in Business Central are typically used for regular entries such as rent, utilities, and subscriptions. However, many users overlook the ability to reclassify amounts between different G/L accounts, making this feature an invaluable tool for accountants during year-end closing.
In today’s post, I’ll highlight this overlooked feature found in ‘Recurring General Journal’.
Use-Case Scenario
I will be using draw-down accruals as an example to demonstrate how this feature is a valuable asset in streamlining accounting processes.
Insurance Premiums
When an organization pays for an annual insurance policy, it often pays upfront, but the coverage is spread out over time. If you have a policy where you pay a lump sum at the start of the year (e.g., $12,000), the expense should be recognized evenly throughout the year.
Accounting Period: 1 Jan to 31 Dec
Initial Entry on 1 Jan:
• Debit: Prepaid Insurance (Asset) $12,000
• Credit: Accrued Liabilities (Insurance Payable) $12,000
Monthly Draw-Down (Accrual):
Each month, you recognize the portion of the premium that relates to that period:
• Debit: Insurance Expense $X
• Credit: Prepaid Insurance (Asset) $X
Insurance premiums are often adjusted based on factors such as discounts, claims experience, partial prepayments, or fluctuating exposures, which can result in an unutilized balance.
Year-End Adjustment (31 Dec):
At year-end, when there is a remaining prepaid balance, we can reverse the balance:
• Debit: Accrued Liabilities (Insurance Payable) $300
• Credit: Prepaid Insurance (Asset) $300
As you can see, we have an unutilized balance of $300 sitting on Prepaid Insurance G/L.
Reversing Using ‘BD Balance by Dimension’
Instead of reviewing the unutilized balance of each prepaid expense individually, we can use the “BD Balance by Dimension” feature to reverse them all at once.
Since we are reversing from the Prepaid Insurance G/L, we will create an entry using this G/L account for the reversal.
Next, we will add Accrued Liabilities G/L on ‘Allocations’.
Result from Preview Posting.
With this feature, it ensures that the unutilized balance from the prepaid expense G/L is reversed alongside the accrued liabilities, simplifying the reconciliation process.
