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What is the recommended practice to recognize an expense using any computerized accounting system and base on the accrual method of accounting? Should the expense be recognized when a Purchase Order (PO) is approved or only when we receive the invoice from the vendor? Thank you in advance for any advise provided. |
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It depends on the accounting method that your company uses. You should ask your accountant. If you're using a cash method of accounting, you should recognize the expense when its paid. If you're an accrual method, you recognize the expense when the event which fixes the need to pay occurs (i.e.: when the service is provided, or the order is placed). |
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