Pending application items (555): the “bridge” account to be cleared for the closing of the fiscal year
Posted: Sat Dec 21, 2024 5:01 am
We explain how we should treat the account of pending application items.
Account 555, Pending items, is one of the accounts where we usually keep everything that we have not identified in the accounting.
By charging unidentified payments, we will be misusing the account
Just like in the corner we all have in our house to put stuff, in accounting we also have that junk drawer where we record those movements that we have not identified. It is account 555 “Items pending application” , which, however, can become a double-edged sword if it is not reviewed periodically. Because… what do we do with those unidentified movements from January now in December?
Rule #1: Account 555 must be reviewed periodically
Without wishing to be critical, having too many entries in this account can be a sign of negligence or a reflection of a “bad accountant”. Like everything in life, each transaction has a reason or cause. It is a matter of searching… If we analyse each of the items that make up this balance, there may be amounts that ghana email list we did not know where to put at the time, but today, one step away from the accounting closing , we must record them in specific accounts. It is a difficult task and there cannot be any outstanding balances.
What are pending application items?
According to the General Accounting Plan (PGC), this account is for “remittances of funds received” which, “in principle”, are not identifiable. That is, given the definition:
They can only be charged to collections , never to payments.
Since they are not identifiable "in principle" , it is an account that is purely a transit account. Once its nature is known, account 555 must be cancelled and credited to the correct account.
The review of this account 555 should be a periodic task for accounting professionals .
Rule #2: We will never record payments, only collections in account 555
Let's see an example of its use. It is very common to prepare the closing of the fiscal year or the month, check the bank account and find that the balance does not correspond to the one recorded in account 572 due to a transfer that we do not know what it corresponds to. To avoid delays, the difference would be recorded in account 555 Pending Application Items.
What consequences can this have for us with the Treasury?
Poor management and use of this account may constitute an infringement and, therefore, the Treasury could impose a fine . We see them below:
Article 200 of the General Tax Law considers non-compliance with accounting obligations and, specifically, inaccurate information and the use of accounts that are not the appropriate ones to be used as a tax offence.
Article 195 of the same law states that it is an infraction to impute apparent positive or negative items in our declarations.
Article 192 establishes as an infraction the failure to submit our tax returns correctly and completely.
Rule #3: We will not leave unidentified balances for long periods, as this may result in fines from the Treasury.
Share!Start of marked textDiscover the negative tax consequences that bad practices with pending appli- cation items can bring.
Account 555, Pending items, is one of the accounts where we usually keep everything that we have not identified in the accounting.
By charging unidentified payments, we will be misusing the account
Just like in the corner we all have in our house to put stuff, in accounting we also have that junk drawer where we record those movements that we have not identified. It is account 555 “Items pending application” , which, however, can become a double-edged sword if it is not reviewed periodically. Because… what do we do with those unidentified movements from January now in December?
Rule #1: Account 555 must be reviewed periodically
Without wishing to be critical, having too many entries in this account can be a sign of negligence or a reflection of a “bad accountant”. Like everything in life, each transaction has a reason or cause. It is a matter of searching… If we analyse each of the items that make up this balance, there may be amounts that ghana email list we did not know where to put at the time, but today, one step away from the accounting closing , we must record them in specific accounts. It is a difficult task and there cannot be any outstanding balances.
What are pending application items?
According to the General Accounting Plan (PGC), this account is for “remittances of funds received” which, “in principle”, are not identifiable. That is, given the definition:
They can only be charged to collections , never to payments.
Since they are not identifiable "in principle" , it is an account that is purely a transit account. Once its nature is known, account 555 must be cancelled and credited to the correct account.
The review of this account 555 should be a periodic task for accounting professionals .
Rule #2: We will never record payments, only collections in account 555
Let's see an example of its use. It is very common to prepare the closing of the fiscal year or the month, check the bank account and find that the balance does not correspond to the one recorded in account 572 due to a transfer that we do not know what it corresponds to. To avoid delays, the difference would be recorded in account 555 Pending Application Items.
What consequences can this have for us with the Treasury?
Poor management and use of this account may constitute an infringement and, therefore, the Treasury could impose a fine . We see them below:
Article 200 of the General Tax Law considers non-compliance with accounting obligations and, specifically, inaccurate information and the use of accounts that are not the appropriate ones to be used as a tax offence.
Article 195 of the same law states that it is an infraction to impute apparent positive or negative items in our declarations.
Article 192 establishes as an infraction the failure to submit our tax returns correctly and completely.
Rule #3: We will not leave unidentified balances for long periods, as this may result in fines from the Treasury.
Share!Start of marked textDiscover the negative tax consequences that bad practices with pending appli- cation items can bring.