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Recognition of cash

Recognition of cash

In our company some customers pay us on a 30 day period from the date of invoice. Our period end for P2 is Sunday 24th Feb. Customers have provided us with remmittance slips dated 24 Feb however the cash will not clear the bank until Monday 25th. Our current process has been to recognise this cash in P3 when it clears the bank. However, my question is can we recognise this cash in P2 when we receive the remmittance and to show as cash in transit or uncleared funds. What dies the standards say and what standard should I refer to, IAS 18 revenue recognition ?

Appreciate any feedback.



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By tom123
22nd Feb 2013 20:31

Stick with your current process - keep it simple.

I wouldn't treat remittance advices as cash, but just post the cash receipt when the funds arrive in your account.

Why would you want to understate debtors and overstate the bank by posting early? what really is gained by this.

I accept that, when we used to receive cheques, one would often post the receipt of the cheque prior to paying in a batch that may or not get there before or after 3.30 that day. - however a cheque is a bit stronger indication of funds arriving than an advice alone.

Probably not what you were looking for, I expect, however.


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28th Feb 2013 13:38

BACs is fast, these days

PAYMENT is either a cheque, cash, or BACs.  A slip is just an indicator, but no more.

Noticed you are talking about cleared/uncleared funds.  Once the sum shows on your account, and these days that can be same day, even if not yet cleared as spendable money, it should be counted as paid in.

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