A cancelled prepaid service balance needs to be reconciled with the service already received, the remaining entitlement and any refund or cancellation charge. Stopping the service does not automatically explain how the unused balance should be recorded. Give the accountant the underlying agreement and actual cancellation evidence.

Accounting records, calculator and glasses on a desk
Illustrative photograph by Cht Gsml.

Establish the original coverage

Keep the invoice, payment, start and end dates and the schedule used to release the prepayment. Identify whether any deposit, setup fee or separately charged item was included.

Confirm the cancellation date and the provider’s response. A request to cancel is different from an accepted termination with an agreed settlement.

Reconcile the remaining amount

Compare the ledger balance with the period already recognised and the supplier’s final statement. Separate an agreed refund, a disputed amount, a cancellation fee and credit available for another service.

Ask the accountant about the accepted treatment and supporting entries. Do not continue releasing an obsolete schedule automatically, or remove the remaining asset simply to close a supplier account.

Example: refund less than the unused portion

A company ends an annual subscription early and receives a partial refund. The difference might reflect a contractual charge, a non-refundable component or an error needing clarification. Obtain the provider’s calculation rather than treating the whole difference as an ordinary monthly expense.

Keep any credit note and relevant tax evidence with the settlement. The bank receipt alone does not explain the service-period allocation.

Close the schedule carefully

Retain the original schedule and the approved revision with a clear change date. Reconcile the refund to the bank and the final supplier balance. Leave disputed recovery amounts visible for review instead of hiding them inside the next month’s subscription cost.

Related practical guidance

For the surrounding records and responsibilities, see bookkeeping basics, company records to keep, bookkeeping and accounting.

Official guidance: IRAS official guidance.

Help with your company records

For accounting, bookkeeping and related compliance support, contact Raffles Corporate Services at [email protected] or WhatsApp +65 8501 7133. Tell us which records or process need attention so we can discuss the relevant next steps.