Accounting & Bookkeeping & Small Business Forum

At my work place there is confusion and it cause me and my treasurer to contradict in opinion.

We receive a insurance statement on 11 may 2009 and our year ending was 30 may 2009. The statement shows $1500 payable for the next three months coverage.

If we pay then we can put it in the prepaid but was not paid till 30 May 09 but my treasurer wants to put that to prepaid and accounts payable. Does this rule obey GAAP of any country.

If its okay to do then under what section in GAAP. please let me know.

Tanks

Assume insurance coverage began 05/11/09 and assume year-end is 05/31/09 (not 05/30/09) as you indicate, then your choices are:
Accrue insurance expense from 05/11/09 to 05/31/09,
Or record insurance premium in manner your superior suggested as debit to Prepaid Insurance and credit to Accounts Payable. Then, record insurance expense from 05/11/09 to 05/31/09 as Debit to Insurance Expense and Credit to Prepaid Insurance.
Then, when premium was paid on 05/30/09, Debit Accounts Payable and Credit Cash.

Hi

This may be transfer in same month but you can edit in different entrees in three months.