Making a prepayment to move payment date to next year

One of our charity fund-raising events is close to our year end. Result is that most fund-raising costs are paid in the old year, but all receipts are in new year. We want to report both costs and receipts in the new year accounts, so I assume I need to make the payments pre-payments so they appear as assets at year end balancing some apparently outstanding unpaid invoices. I then need to pay the invoices from these assets in the new year. Is that right? If so I need help on how to do this as I have tried and soon got stuck.

Since sending my question my accountant daughter has told me that I do indeed need to leave the invoices unpaid at year end, but make prepayments for the amounts involved before the year end. I assume the prepayments are unassigned in QF at this stage. In the new year I then need to settle the invoices by paying them from the money in prepayments. I’ve tried to do this again but still got stuck. Can you explain how to do this correctly please?

I’m not an accountant but what I do with similar things in my business (e.g. water bills that arrive just before my year end but relate to the following year’s charges) is to enter the purchases as normal and log the payments on the date they were actually paid, so everything is correct for VAT purposes, then journal on the last day of the accounting year to credit the relevant expense codes and debit prepayments, and set that journal to auto-reverse on the first day of the following accounting year. This then means that the costs show as prepayments on this year’s balance sheet and as expenses on the next year’s P&L, but I still claim back the VAT on the right quarter’s return.

Hello Ian
Thanks. That was very helpful and is what my son has also since advised me to do. I’d never bothered to learn about journal entries and was happy for QF to make them automatically from my transactions, but I see now the purpose in making manual journal entries at the year end to move money from one place to another.

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