Business Finance or Bookkeeping question: If you buy something on a company CC at the end of a fiscal year...

[PingSpike]

Does it go under the coming, new fiscal year or the old year when it was originally charged?

 

[jadinolf]

The next year.

 

[PingSpike]

Originally posted by: jadinolf
The next year.

Why? Is it because thats when the actual money is doled out?

 

[ggnl]

It depends. If you are accounting under the cash basis, it goes on the next year. If you're using accrual accounting you charge it under the current year (when the expense was incurred).

Unless this is a business we're talking about you're probably using the cash basis.

 

[axelfox]

LIFO or FIFO?

 

[Orsorum]

Originally posted by: ggnl
It depends. If you are accounting under the cash basis, it goes on the next year. If you're using accrual accounting you charge it under the current year (when the expense was incurred).

Unless this is a business we're talking about you're probably using the cash basis.

Exactly. Most businesses are going to use accrual basis, which means you recognize revenues and expenses when they occur, not necessarily when cash flows.

 

[Nuriko]

Yeap, like Orsorum and ggnl said, since this is a business and most all are accrual basis, you have to record it when it's accrualed, which is this year (and as such shows up on this year's balance sheet and income statement). But to show that you didn't pay it until the next year, it shows up on the next year's Statement of cash flows (and possibly the IS as well depending on when you pay and if you have any interest expense results from waiting to pay it).