Dealing with Deferred income

Hi all,

We charge all our customers up front (yearly, quarterly, monthly), so we have to defer all income and spent lots of time in Excel every month trying to get the right recognised revenue for every income nominal code. It gets more and more complicated because now management wants more nominal codes and products to use on invoices. So we will have to defer every nominal code.
Maybe someone has a very clever way to deal with deferred income in Excel or in any other way?

Many thanks!

Comments

Deferred Income posting

ryanjsprice | | Permalink

Rasa

I see you posted this query a couple of weeks ago - have you solved the problem by now?

If not, what finance system are you using (or are you keeping your accounts in Excel)?

Kind regards

Ryan

deferred income in Excel

Cantona1 | | Permalink

Please refer to similar question posted by RIKOS on, Mon, 05/07/2010. Simon has already came up with one possible solution in Excel. IMO, there are only  few Accounting software which have deferred income functionality. Most off-shelf packages do not have this function.

 

3569787's picture

Think of how fixed assets are treated?

3569787 | | Permalink

Deferred income can be treated very much like a fixed asset - but in reverse.

Instead of a debit balance for an asset you have a credit balance for the deferred income.

Instead of a periodic charge over a period of months to a depn charge a/c you have a release of income over a period of months to a revenue a/c.

When viewed in this way a flexible fixed asset system can be used that instead of charging depn, releases the revenue to P/L on a periodic basis.

All you need to set up is the deferred income amount and length of time over which to release revenue and let the standard depn charge routine deal with it.

It is an approach I have seen work well. So just a thought for those of you that have not considered this approach.

 

Post all your sales invoices to the balance sheet

David Carter | | Permalink

 Agree with 3569787.   Suggest that you analyse all your sales invoices not to the "Sales" nominal code in the P&L but to an "Accrued Income" or similar nominal account in Current Assets in the Balance sheet.

So during the month no sales get posted to the P&L at all.

At the end of the month, export the transactions in Accrued Income to Excel, and work out how much of them you want to apply to this month, e.g £10000.   Then post a nominal journal: debit Accrued Income £10000, credit Sales £10000.

(I'm an IT consultant so you'd better check with a real accountant that this would be OK)

carnmores's picture

i like this lateral thinking

carnmores | | Permalink

does your accounting system have any sort of memorised trannsaction facility

Hi Rasa,

stervjatnik | | Permalink

Hi Rasa,

Which accounting software do you use?

I have ate the dog on the deferred income as I deal with it on monthly basis. Depending which information you can extract from your software, you can do Deferred Income in Excel and then post the required journals to the specific nominal codes.

Regards,

Igor

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