Prepaid Expense and Accrual Schedule
Build the schedule every controller keeps in a spreadsheet: prepaids amortized month by month, accruals with their reversals, and the journal entries that post them. Then tie it to your general ledger and see exactly what is not on the schedule.
Build the schedule
For the schedule behind the prepaid expenses line and the accrued liabilities line on your balance sheet. One row per item, carried forward month to month, and tied to the ledger at the end.
Your month
The close
The month being closed, and what the ledger says.
Amortization and accruals are for this month.
The prepaid account balance at month end, from the trial balance. The tie-out compares the schedule to it.
Prepaid items
Anything paid ahead: insurance, software, rent, a sponsorship.
Closes September 2026 at $63,000.00
Closes September 2026 at $56,958.90
Closes September 2026 at $18,000.00
Accruals
Costs incurred this month and not yet invoiced.
Runs entirely in your browser. Nothing you enter is sent to us or stored.
Your September 2026 schedule
Updates as you type
Difference not on the schedule
$3,541.10
Schedule total $137,958.90. General ledger $141,500.00.
Amortization this month
$17,356.17
Plus $22,500.00 accrued
- Opening balance
- $155,315.07
- Additions
- $0.00
- Amortization
- -$17,356.17
- Closing balance
- $137,958.90
The schedule
| Item | Opening | Additions | Amortization | Closing | Months left |
|---|---|---|---|---|---|
| Directors and officers insurance | $70,000.00 | $0.00 | $7,000.00 | $63,000.00 | 9 |
| CRM platform, annual | $67,315.07 | $0.00 | $10,356.17 | $56,958.90 | 6 |
| Conference sponsorship | $18,000.00 | $0.00 | $0.00 | $18,000.00 | 1 |
| Total | $155,315.07 | $0.00 | $17,356.17 | $137,958.90 |
The entries
| Date | Entry | Account | Debit | Credit |
|---|---|---|---|---|
| 2026-09-30 | Prepaid amortization, 2026-09 | 6410 | $7,000.00 | |
| 6210 | $10,356.17 | |||
| 1300 | $17,356.17 | |||
| 2026-09-30 | Accrual: September legal fees | 6510 | $22,500.00 | |
| 2150 | $22,500.00 | |||
| 2026-10-01 | Reversal: September legal fees | 2150 | $22,500.00 | |
| 6510 | $22,500.00 |
What to look at
- CheckConference sponsorship ends this month or nextA renewal is usually due.
- NoteConference sponsorship has not started yetStill fully prepaid, which is correct.
- CheckCRM platform, annual: the convention changes the balanceBy month it would close at $57,750.00; by day at $56,958.90. Choose one deliberately and use it every month.
- Runs entirely in your browser. Nothing you enter is uploaded, and the schedule file stays on your machine.
- Every item's amortization sums exactly to what was paid: rounding is carried, never dropped.
Related reading
What a month-end close has to tie out, and what it takes to keep the schedules behind the balance sheet current.
- Glossary
Reversing Journal Entry
A reversing journal entry is an entry booked in one period and automatically reversed, opposite debit and credit, on the first day of the next. It is most often used for accrual estimates so the real invoice that follows is neither missed nor double-counted.
- Glossary
Balance Sheet Reconciliation
Balance sheet reconciliation is the practice of reconciling every balance sheet account, not just cash, on a documented schedule with a named owner and risk tier per account. It is the close deliverable auditors test first, and account reconciliation is the technique it applies, account by account.
- Use case
Journal Entry Automation
- Guide
Month-End Close
- Free tool
Depreciation Calculator and Schedule
- Free tool
Financial Ratio Calculators
How prepaid and accrual schedules work
Why prepaids exist at all
Under accrual accounting a cost belongs to the period that benefits from it, not the period it was paid in. A twelve-month insurance policy paid in July benefits July through June, so it is recorded as an asset, a prepaid expense, and moved to expense one month at a time. Paying it does not change profit. Using it does.
Straight line by month, or by day
The two common methods give the same total and different monthly figures.
By month divides the amount by the number of months in the service period and books an equal share each month. It is simple and it is what most schedules do. It needs a rule for a service period that starts mid-month: a full month, a half month, or nothing in the first month.
By day divides the amount by the number of days in the service period and books each month its actual days. It is exact for any start date, which is why it suits a subscription that renews on the 15th, and it produces slightly different figures in 30-day and 31-day months.
By month: amount / months in period, per month
By day: amount / days in period x days in this month
Neither is wrong. What matters is choosing one per item, deliberately, and not letting a mid-month start drift between conventions from one month to the next, because that is how a schedule stops agreeing to itself.
Point in time
Some prepaids are not used evenly. A deposit for a conference in November is prepaid until the conference happens, and expensed in November. Amortizing it straight line from the date it was paid would expense it before the benefit arrives.
Accruals, and why they reverse
An accrual records a cost that belongs to this month but has not been invoiced yet: legal work done in September, invoiced in October. The entry debits the expense and credits accrued liabilities for the best estimate.
On the first day of the next month the accrual reverses. Then, when the real invoice arrives, it is booked through accounts payable as normal. The reversal cancels the estimate, the invoice replaces it, and the only amount left in the new month is the difference between the two, the true-up. Without the reversal the cost would be recorded twice.
September: Dr Legal fees 22,500 / Cr Accrued liabilities 22,500
October 1: Dr Accrued liabilities 22,500 / Cr Legal fees 22,500 (reversal)
October 14: Dr Legal fees 24,180 / Cr Accounts payable 24,180 (the invoice)
Net in October: 1,680 of legal fees, the true-up
The tie-out
The prepaid account on the balance sheet is a control account: its balance should equal the total of the schedule on the same date. When it does not, the cause is almost always one of four: a payment coded to prepaid with no schedule row, an amortization entry not posted or posted twice, a schedule row amended after its entries were posted, or an item fully used but still on the schedule. Reconciling the two every month is what makes the balance sheet line trustworthy, and it is the step most often skipped.
Materiality
Most companies expense small prepaids immediately rather than schedule them, under a written threshold. That is an accounting policy choice, and a reasonable one: a schedule full of $300 items is work without information. The tool does not apply a threshold. It schedules what you enter.
Worked example
The sample the tool loads. Invented.
Northfield Analytics, a 200-person software company, is closing September 2026. The prepaid expenses line on the trial balance reads $141,500.00.
Their prepaids:
| Item | Paid | Service period | Method |
|---|---|---|---|
| Directors and officers insurance | $84,000 | July 1, 2026 to June 30, 2027 | Straight line by month |
| CRM platform, annual | $126,000 | March 15, 2026 to March 14, 2027 | Straight line by day |
| Conference sponsorship | $18,000 | The event, November 12, 2026 | On the date |
September amortization:
Insurance: 84,000 / 12 = 7,000.00
CRM platform: 126,000 x 200/365 - 126,000 x 170/365
(the running total, rounded) = 10,356.17
Sponsorship: not until November = 0.00
Total = 17,356.17
Balances at September 30:
| Item | Balance |
|---|---|
| Insurance, nine months left | $63,000.00 |
| CRM platform, 200 of 365 days used | $56,958.90 |
| Conference sponsorship, untouched | $18,000.00 |
| Schedule total | $137,958.90 |
The tie-out: the ledger says $141,500.00 and the schedule says $137,958.90. $3,541.10 is in the prepaid account and on no schedule. It traced to a deposit for a December trade show, coded to prepaid in August by someone who did not know the schedule existed. One row added, and the two agree.
One accrual: $22,500 of September legal fees, estimated from the firm's work-in-progress note, reversing October 1. When the invoice arrives on October 14 for $24,180, October carries the $1,680 true-up and nothing else.
What the convention choice is worth here. Had the CRM platform been amortized straight line by month with a half month in March, its balance at September 30 would be $57,750.00, not $56,958.90. A $791.10 difference is not material for this company. It is still worth knowing that it exists, so that nobody switches methods partway through the year and spends an afternoon looking for it.
What this does not do
This builds a book schedule from the items you enter. It does not read your ledger, find the payments, or post the entries: the tie-out compares against the balance you type, and nothing more. It does not schedule deferred revenue, leases, or capitalized costs, and it applies no materiality threshold. It produces book figures only, and the tax treatment of a prepayment can differ.
Questions
A schedule of every payment made in advance for a service that will be used over time, showing how much is expensed each month and how much is still an asset. Its total at the month end should equal the prepaid expenses account in the general ledger.
Divide the amount over the service period, by months or by days, and move each month's share from the prepaid asset to expense with a journal entry: debit the expense, credit prepaid expenses. Something used at a single point in time, like an event, is expensed in the month it happens.
Either, applied consistently. By month is simpler. By day is exact for a service period that starts mid-month. What causes trouble is switching between them for the same item.
So the real invoice can be booked normally when it arrives without counting the cost twice. The reversal cancels the estimate on the first of the next month, the invoice replaces it, and only the difference between the two lands in the new month.
For a payment coded to the prepaid account with no row on the schedule, an amortization entry missed or posted twice, a row changed after its entries posted, or an item fully used and still listed. The size of the difference usually points to which.
No. Deferred revenue is the other side of the same idea, cash received before it is earned, and it is a liability with its own recognition rules. This tool schedules costs.
Not necessarily. This is a book schedule. Tax rules for deducting prepaid expenses differ, including a rule that can allow some prepayments to be deducted when paid. Ask your tax adviser how your prepaids are treated on the return.
No. The schedule is built in your browser. Save the schedule file to carry it to next month; it stays on your machine.
Stop rebuilding the
schedule every month.
Schedules carried forward in the files you already keep, entries drafted with their support attached and the reversal scheduled with them, and nothing posted until your team approves it.