income recognition

income recognition

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do we recognise this as income, where no work has been carried out or as a liability (order invoice is March;work starts in April;year end is 31 March)- any technical help would be greatly appreciated
many thanks
fran

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By David2e
13th Mar 2008 17:07

Unearned/Deferred Income
Hi Fran

To simply answer your question, it would show as a liability.

When you raised the invoice, you probably credited the income account. This should then be moved to an Unearned/Deferred Income liaibility account, and then moved back to income as the work is done and the income is earnt.

You may move it back monthly, quarterly or at the year end... depends on your management and reporting requirements.

Hope that helps!

David Toohey
The Accountants Circle

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