I am working on preparing the year-end accounts for a small charity. Following other posts/advice on here I have read through the charities SORP (Chapter 5). I have a better understanding of how restricted income is presented in the year-end accounts. However I (still) do not understand how recognising restricted income in Year 1, satisfies the matching concept, when the related expenditure to that restricted income will fall in Year 2.
I understand (now) that I cannot treat such restricted funds year-end balances as deferred income (which had been my initial thought). For the purposes of 'matching' income and expenditure would it be acceptable to net-off the restricted income total by including a contra-entry total in the 'creditors falling with 12 months'?
I am trying to avoid starting a 'famine-and-feast' cycle, showing a high level of restricted income in the B/S in Year 1, and the subsequent high level of expenditure in Year 2.
Any thoughts on how I can successfully match restricted income and expenditure in the same annual set of accounts would be most welcome. Thanks.