Hi everyone,

first of all, I have never worked in a big company with very good internal control, and there has been this question bothering me for a very long time.

How and when a company records its expense? For example, if my company need to hire a trucker to delivery some merchandise.  what we do right now is :

on 6/15, we sent our instructions to the trucker company that a service is needed on 6/20.

6/20, the trucker delivered the merchandise.

7/10, we received the bill for $700 from the trucker, and the bill date is 6/22. Our AP post the bill on 7/10, use the systme date as 6/22. The terms we have is NET30,  a check for $700 was mailed on 7/22.

So my question is , is this the right way to do the accounting? what kind accounting is this ? I know it is not cash accounting because we have AR, and AP, but it doesnlt feel like full accrual either, because on 6/20, we have expense incurred, while not reflecting in our accounting record.

One more probelm we have is to difficulty to close a period, as retrospective adjustment is so frequent, like a vendor sent a bill 3 months later.. It became a problem now, because we start to get a loan from a bank, and the constant restatement of past period is irritating the bank a lot.

So what is the proper way to do this? How does a company with good control hand this? I am sure companies like Kraft can't constantly changed their number with SEC..

Also, why the trucker bill date is 6/22, shouldn't it be 6/20 when they  rendered the service?

Any of your suggestions are highly appreciated!

Hi,

I will give you a run down of our co. which is a mfg company.

ALL inventory items have a PO.

1/1/2010: We place a PO with a vendor- No Impact on the books.

1/15/2010: We receive the inventory item ordered from Vendor. Inventory is debited

1/25/2010: Receive invoice from Vendor.

AP enter's the invoice with the receipt date as invoice date (1/15/2010). This is based on company policy.

If the invoice was not received in January but we got it on 2/10/2010, then at January Month end, we need to accrue the "Uninvoiced Receipts" on the books. We run a report that tells us all the receivers (receipts) that have not yet been attached to an invoice. We take this total from the report and book it as Accrued Payable in our books.

1) Your intial question was to build a receiver system?

  One reccomendation would be to create PO's for the item(s)

  When the item comes in, shipping will receive it in the system and create a "receiver" by entering the PO number and Po line. The receiver will be a system generated number. At this time you inventory is debited. The PO could've been for misc. items as well such as Office supplies. You could create a Misc PO with the appropriate expense code linked to it.

You could run a report at month end to get a total for all receivers that are not yet linked to an invoice as of month end date. By the way the report must have PO cost, QTY received, Total (PO cost x qty). Use this report total to accrued payable that occured during that month