Journalizing Unbilled Time

QUESTION: How can I start track Unbilled Time through our general ledger?

RESPONSE: To start recording unbilled in the general ledger, most firms execute the Aged WIP report as at year end (once the last month of the year is closed) and journalize the asset against equity or unbilled revenue depending on accounting method. This report values the time using working rates. Firms licensed to managed cost rates, have the option to value the Aged WIP results at the lower rate.

To mitigate gaps due to WIP management permitted functions and processes affecting entries with a transaction date in a prior period, users favor the reversing entry option. With a reversing journal entry process, they can journalize the full WIP amount each time a journal entry is required, instead of a calculated difference that may not consider these occasional changes to unbilled time on previously dated time entries. Some firms repeat this process monthly, weekly depending on firm requirements. 

RELATED DOCUMENTS:

General Ledger - Month-End and Year-End - Journalizing Unbilled Time