Not always what you estimate works out the way you initially thought. An estimate in essence is \u201cestimating\u201d or \u201cguessing\u201d what might happen based on the information you have at your disposal at the time you\u2019re making the estimate into your accounts.\u00a0<\/p>\n
It\u2019s perfectly okay to make the estimate and if the situation changes, some new information arises etc. to reverse the expense, that is to re-estimate of what was initially estimated. So how do you come about and do it? When making the initial estimate, you used the information present at the time and if you get new information, that is inputs change, you should make a new estimate. This new estimate is then the expense you should have in your books.\u00a0Note here that a change in an estimate is always done prospective<\/strong>! There are very few chances it can be made retrospective and the situations all involve a mistake being made in accounts so hence I will not mention them further. So, say that if the initial estimate was at 20,000 and now we estimate the expense in fact is 19,000, we need to reverse the 1,000 (the difference). The reversal is made to the exact same accounts the expense and the liability were initially booked only with opposite debit-credit entry.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Not always what you estimate works out the way you initially thought. An estimate in essence is \u201cestimating\u201d or \u201cguessing\u201d what might happen based on the information you have at your disposal at the time you\u2019re making the estimate into your accounts.\u00a0<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[],"class_list":["post-5039","post","type-post","status-publish","format-standard","hentry","category-1-9-payables-to-employees"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5039","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=5039"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5039\/revisions"}],"predecessor-version":[{"id":5040,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/5039\/revisions\/5040"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=5039"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=5039"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=5039"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n\n
\n #<\/strong><\/td>\n Debit-Credit<\/strong><\/td>\n Account name<\/strong><\/td>\n Amount<\/strong><\/td>\n<\/tr>\n \n 1<\/em><\/td>\n Debit<\/em><\/td>\n Bonus liability (i.e. Payable to employees)<\/em><\/td>\n 1,000<\/em><\/td>\n<\/tr>\n \n \u00a0<\/em><\/td>\n Credit<\/em><\/td>\n Bonus expense<\/em><\/td>\n 1,000<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n