openerp-expert-accounting team mailing list archive

[Gustavo Adrian Marino <gamarino@xxxxxxxxx>]

Let me add other reason why prepaid account is used (at least here in
Argentina)

When you invoice the prepayment, VAT credit could be used by the customer.
That's why at cancellation of the final invoice (the one you send once the
goods are actually delivered), you emit a credit note for the prepayment
(generating the counter movement to the prepayment, leaving the money to be
applied to the final payment and reverting the fiscal debt due to
prepayment VAT) and you use the customer credit to cancel the final invoice

This mechanism is independent of the fiscal year cut-off and allows you to
correctly treat prepayment as a debt you have with your customer till the
sending of the goods/services

Regards




2013/11/20 Alexandre Fayolle <alexandre.fayolle@xxxxxxxxxxxxxx>

>  In Frederic's mail, you should read of course "a pro-forma invoice is
> not a legal document that you can use in your books."
>
> Alexandre
>
>
> On 20/11/2013 14:08, Frédéric Clementi wrote:
>
> @ Eric :
>  -- That is my problem today. Those modules are great but rely on the
> default AR account which is incorrect in my opinion.
> This is not a technical issue (actually Guewen answered perfectly the
> technical question) but an accounting/SOP issue --
>
>  FYI you cannot accuse me to be too technical... I am not a developper !
> actually I have an account background    :)
>
>  Joke appart, to sum up my message below :  do not create a prepayment
> account instead of using the usual AP/AR accounts.
>
>  I used MG comments to explain my point :
>
>
>  Hello
>> Pre-payments transactions differ from cut-off issues!
>>
> No. Be careful to accounting terminology. Let clarify what I mean with
> that example found on the web here :
> http://www.accountingcoach.com/blog/prepaid-expense). I rephrased it to
> simply :
>
>  *01-dec *: you pay your next 6 months insurance for 6000 $ -> debit
> 'Prepayment account' - credit 'Bank account' for 6000$ (note that there are
> no expense recorded in my books at this stage)
>
>  *31-dec* : as it is the last day of your fiscal year, you want to
> exclude 5 months paid but related to the next fiscal year -> Debit
> 'Insurance expense account' - credit 'Prepayment account' for 1000$ (*this
> is a cut-off entry* -> I record an expense of 1000$ on my current fiscal
> year)
>
>  *01-jan* : I reverse my cut-off enty -> debit 'Prepayment account' -
> credit 'Insurance expense account' for 1000$
>
>  *01-mar* : imagine that I receive my insurance invoice that day ->
> debit  'Insurance expense account' - credit 'Prepayment account' for 6000$
>
>
>>
>> A prepayment is made at the request of a partner as a necessary condition
>> for him to deliver the service or the product; as such it is recognized in
>> the books as a payment in advance (for an invoice to be received); it is
>> usual to receive a pro-forma invoice (for ecommerce the transaction amount
>> is either sent by email or just stated on a web page (that can be printed
>> offline).
>>
>
>  I found this stated on some website as well but again be carefull with
> this is partially wrong.
> 1st point - a pro-forma invoice is not a legal document that you cannot
> use in your books. So, the accounting entry to be recorded is a basic
> payment -> debit 'payable account' - credit 'bank account'  (if you pay
> money to a supplier) OR debit  'bank account' - credit 'receivable account'
> (if you receive money from a customer).
>
>  2nd point : if you recevable money from a customer for some goods you
> have delivered and that you have not invoiced yet you do not have to use a
> prepaid account ... you have to use instead the usual receivable account.
>
>  Conclusion : a prepaid account must be use for cut-off purpose in order
> the fullfill the segregation of period principle when you paid something
> that must must linked to a other fiscal year .....but not to record any
> payment that you receive or you pay before the invoice booking like a
> simple goods delevery.
>
>  Hope this clarify my point.
>
>  Frederic
>
>
>
>
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>
> --
> Alexandre Fayolle
> Chef de Projet
> Tel : + 33 (0)4 79 26 57 94
>
> Camptocamp France SAS
> Savoie Technolac, BP 352
> 73377 Le Bourget du Lac Cedexhttp://www.camptocamp.com
>
>
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-- 

Gustavo Adrian Marino

Mobile: +54 911 5498 2515

Email: gamarino@xxxxxxxxx

Skype: gustavo.adrian.marino