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Future Events

Future Events

I wonder if anyone can help me with this?

We receive income for a number of shows These shows can be for events into the future, often past our financial YE. If the show is cancelled, refunds are given.

Currently the situation for accounting is that ALL monies received for shows, is charged straight to the P&L.

This to me seems odd, inacurate and fundamentally incorrect. Revenues are not being matched with expenses, and the company is not recognising the liability that may be arising because of the refund situation.

Currently the accounting entries are:

DR: Bank - Monies received for Tickets
CD: P&L - Ticket Sales

I am proposing this:

DR: Bank - Monies received for ticket sales
CR: Future Sales Account - A liability Account

DR: Future Sales when Events have been undertaken with money for show
CR: P&L As monies are recognised when they have been undertaken

Does anybody else have experience of this? Am I going about this the correct way?

Your help and comments greatly appreciated

With kind regards

Steve

Steven Noonan

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15th Oct 2008 13:59

Right in principle
You are right on the matter of principle, the income shouldn't be recognised until the show happens.

But this may be a case where the book keeping is different to the reporting?
For instance we book ticket sales to a P&L code in sage as they happen but in our management & statutory reporting we only recognise the shows that have matured (via the magic of spreadsheets), which saves journalling them off the bs at the end of the period. Ditto production expenses which are treated as prepayments until the show happens.

If the current policy you describe makes it through to the statutory accounts, I'd be very surprised that the auditors are happy with it.

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