If a business (accr meth) charges a business flight to our credit card in December and then is refunded for that flight not taken in January, do I take the credit in Dec?

[Tennisfam]

So, we had to book a few flights in December because we did not yet know the logistics of a future trip in Feb/March 2024. we booked all refundable flights. These flights hit our credit card in 2023, but when they were not necessary, they were refunded in Jan/Feb of 2024. Do I need to account for those refunds in 2023?

[MinhT1 · Accepted solution]

No.

If you use the accrual method, the cost of the flights paid in 2023 and to take place in 2024 should be in Prepaid expenses on the balance sheet, and not in expenses on the Profit and Loss account.

In 2024, when the flights are cancelled and reimbursed, the reimbursement will cancel out the prepaid expenses.

[Tennisfam]

Thanks so much!