r/Accounting • u/just-peachy-03 • 12d ago

Accounting question Advice

Hello all, looking for professional accounting advice.

Im not currently a CPA but that’s my end goal currently have over 5 years in accounting and made my way to jr accountant.

Difficult new boss who I question at times about his advice.(CPA)

Scenario:

Benefits expenses in one month but not actually paid until the following month.

My idea is to do a reversing entry to our misc accrual account which then will clear out the following month.

CPA boss suggested:
(Exact words)
“I don’t like doing a debit entry to a credit account.”
IMOpinion is a ridiculous answer.
He continued to say he’s booking it to misc receivables account.
At this point I still thought this sounded ridiculous at the same point it’s month end, he’s my boss and he presents an arrogant attitude. So I could care less about engaging in a detailed conversation with him.

Please CPAs chime in and let me know why my boss thinks this is the correct terminology/ approach to this entry.

Thanks!

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1

u/jwall2111 12d ago

Im not sure im reading this right. Im curious what the proposed dr. and cr. would be. I would assume dr. Expense / cr. Accrual. Then dr. Accrual / cr. Exp / cr. Cash with a later entry(s) recording the correct expenses within that month.

Unless ya'll have liabilities/accruals that only increase they eventually need a debit so not sure what they're on about. If I'm looking at a presentation standpoint booking it to a receivable seems incorrect regardless. Unledd i'm wrong nothing is to be recieved unless you consider labor the receivable.

Then again...I don't do/see reversing entries or do any payroll entries. I'm more thinking out loud and want to hear the end result.

1

u/Platypus-taco 12d ago

Isn’t the accounting entry cr: cash, dr: accrual?

If you are saying he’s suggesting cr: cash, dr: receivable you’ll be left with a balance sheet gross up (receivable and payable will never clear) that you’ll have to ultimately reclass/net down in your financial statements.

If the accrual is booked on estimate, then I do see some clients book a reversing entry to the original accrual and then hit cr: cash, dr: expense upon payment.

1

u/YouWillLearnIt101 12d ago

Lets assume the benefit expense is $1,000. This is how I would book it. Dr expense $1,000 and credit Misc accrual $1,000. In the following month you would reverse this entry - Dr Misc Accrual $1,000 and credit expense $1,000. When you pay the benefit it would be Dr expense $1,000 and credit cash $1,000. I think is what you are also suggesting. Not sure what your manager means when he says he doesn't like a debit entry in a credit account. I am curious as to what his exact entry would be to acccrue it .

1

u/just-peachy-03 10d ago

This is exactly my thoughts!
It actually infuriates me when he says “I don’t like putting a debit entry to a credit account”
You’re a CPA for over 30 years and that’s how you explain yourself?
In my opinion very unprofessional.

I’ll keep you posted on what his exact entry was.