Most of our sales are deferred, as we advertise and sell events almost all year round. By matter of course, sales and costs for those events have always been deferred for stat accounts.
The company (SME) has never ever run monthly management accounts before, and the director has been running the company financially blind. As part of producing management accounts (with proper closing etc...) is it prudent to defer sales and costs as well, or is this over-kill?
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What good are the management accounts if they don't show the best picture possible?
I'd be making the necessary adjustments as part of the management accounts process.
I would always defer sales and revenue where appropriate.
You will then also be consistent with the year end accounts you are producing.
Agree with the above. These days with the decent software about you can post the sales invoices or supplier bills to deferred income and prepayments accounts then generate simple recurring journals to release the income and costs to P&L as the year progresses.
Also, unless the company is awash with past profits, having reasonably accurate management accounts is essential should the owner wish to draw dividends.