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Please add: Accrual Accounting in Quicken

pplprsn

For those that may not know, accrual accounting is contrasted with cash accounting (the method used by Quicken). Cash accounting is fine for many users, but accrual accounting can add a lot of valuable insights by expensing things over longer periods of time.

For example, if you pay your entire yearly car insurance bill in advance in say January, your expense reports will show a ballooned payment in January, but nothing in the other months. In reality, the amount you paid in January is a expense for the January portion, but a "prepaid asset" for the rest of the months. The same would apply to income received in advance which would be a liability until you actually perform the service and convert it to income.

I would love a feature in Quicken that allows a user to designate a transaction to be accrued over an amount of time on a transaction level or a split level. Perhaps a check button to make a whole transaction or individual split line items that opens up date parameters when you can set the start and end date of an insurance policy, for example, and then an option for how to divide and allocate the amount (day/week/month) with automatic proration for months with partial allocations.

I don't know if this feature exists in the new home business upgrade, but it would be a reason for me to upgrade.

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Tom Young

Speaking as a Window user, "accrual accounting" is in the main nothing more than adding some asset and liability Accounts to the file that you name accordingly - prepaid assets, accrued liabilities, and so forth - and then make entries into them. Using your January car insurance bill as an example, the initial accounting might initially be:

Debit (increase) Prepaid Expenses Account $X.XXX
Credit (decrease) Checking Account $X,XXX

when you pay the bill, and then each month make an entry to amortize that amount in the vein of:

Debit (increase) Auto Insurance Expense Category ($XXX/12)
Credit (decrease) Prepaid Expenses Account ($XXX/12)

The latter can be accomplished either with manual entries or by setting up a monthly Reminder that will make the 12 entries for you.

I assume you can create Accounts in the Mac version in the same fashion and make the same entries?

pplprsn

sure, i can create a new transactions every month for every kind of accruable transaction, but that's way more work and way more accounts than my suggested feature entails

jacobs

You can create a single asset account for something like "Prepaid expenses", and record your annual payments as an increase to that asset account; then create a scheduled monthly transaction to reduce the asset and increase the expense.

That's the same as what I used to do in a true accrual business bookkeeping system. Quicken isn't built to work this way, but you can make it work if you want to spread out income or expenses evenly through the year.