What the adjustment does
An accrual recognises an expense before the cash payment; a prepayment defers an expense already paid; accrued income recognises income before receipt; deferred income carries income forward. The year-end adjustment and the later bank movement are two parts of the same accounting story.
How this works in Bank-Led
Bank-Led still needs accrual accounting adjustments when the accounts basis requires them. At year end, create the controlled accrual/prepayment adjustment against the appropriate nominal. In the following period, when the bank transaction occurs, clear the brought-forward accrual/prepayment/control balance rather than posting the same underlying expense or income a second time.
Migrated/opening accruals
If an accrual, debtor or creditor is brought forward from a previous accountant, keep enough subledger/control detail to identify it. A later bank payment/receipt can then clear that opening item even though the original invoice is not held in Balansix.
Year-end review
- Agree the schedule total to the Trial Balance.
- Check dates and period cut-off.
- Reverse or clear only where appropriate.
- Do not use a generic suspense account when the underlying accrual/prepayment is known.