The Offset Prepaid is used when an invoice is entered with a future Accounting Period, but the check is cut in a previous month. This is an automatic entry. See an example below:


May 31st, 2022:

Credit to the Bank Account

Debit to Offset Prepaid


June 1st, 2022

Credit to Offset Prepaid

Debit to the Expense Account


The Offset Prepaid is zero’ed out in the accounting period the invoice is coded to. If the invoice was entered with an August 2022 accounting period, but the check was cut in May, the balance would remain in the Offset Prepaid account until August 2022, when the debit to the Expense and credit to the Offset Prepaid would automatically occur.