What exactly is turnover?

[Ken Wilson]

Cash accounting is based on when the money moves.

Accrual accounting is based on when the transaction occurs, eg invoice 
sent, rather than when the money is recieved.

In Australia small businesses can use cash or accural accounting, large 
companies must use accrual accounting.

So it depends on which method of accounting you are using, and I have no 
idea about UK tax law.
IANAA

Ken

andy thomas wrote:
> Just a general accounting query regarding the exact definition of the 
> term "turnover"; as I understand it, turnover is the total amount of 
> money flowing into a company over a given period before expenses, taxes, 
> etc are deducted. But is it:
> 
>     a) the sum total of the invoices a company has raised in
>        that period for the work it has done?
> 
>     or    b) the sum total total of monies actually paid to the company in
>        that period?
> 
> 
> Or to put it another way, supposing a company undertakes 10000 UK pounds 
> worth of work in a financial year and sends invoices totalling 10000 ukp 
> out to its customers but only actually receives 9000 ukp in payment 
> during that period - what is the turnover, 10000 ukp or 9000 ukp?
> 
> I only ask this because I'm currently faced with a UK Inland Revenue 
> partnership tax return where two invoices we raised in the 2004/2005 tax 
> year still haven't been paid. Omitting these unpaid invoices from the 
> turnover total means the bank balance then tallies with the apparent 
> turnover although to complicate things further, we have already paid the 
> VAT on these two bad debts as UK VAT rules require tax to be paid when 
> the invoice is raised, not when the customer actually pays us.
> 
> Any suggestions would be gratefully received as I've been stumped by 
> this definition of turnover.
> 
> cheers,
> 
> Andy
> 
> -------------------------------------------
> Andy Thomas,
> netstat -a llp
> 
> Tel: +44 (0)7815 060872
> Fax: +44 (0)20 8372 2582
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