Handling payments in advance

[Derek Atkins]

David Harrison <davidharrisoncga at gmail.com> writes:

> On Fri, 28 Jan 2005 10:23:06 -0500, Derek Atkins <warlord at mit.edu> wrote:
>> Oliver Kiddle <okiddle at yahoo.co.uk> writes:
>> 
>> > The problem is that I'm not sure what account type I should use for the
>> > payments in advance account. It isn't an asset and neither is it an
>> > expense. An equity perhaps? A/Receivable is perhaps the closest?
>> > Or is there a better way to handle this?
>> 
>> It's a Liability.
>
> If you make a payment in advance, in other words a deposit, it is an
> asset.  More specifically, a current asset.

Hmm.. if you're sending a payment to a vendor in pre-payment of a bill
(i.e. you are paying for an expense before the expense happens), then
that is money that the vendor owes to you (until the expense
happens)..  So, uh, yea, I guess it IS an asset.  I'm sorry.

-derek

-- 
       Derek Atkins, SB '93 MIT EE, SM '95 MIT Media Laboratory
       Member, MIT Student Information Processing Board  (SIPB)
       URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
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