Prepaid Services (Unearned Income, Unearned Revenue)

[Pablo Francesca]

Thank you.  That will work. I appreciate your time.

--- On Tue, 8/18/09, John Edwards <jedwards80 at gmail.com> wrote:

From: John Edwards <jedwards80 at gmail.com>
Subject: Re: Prepaid Services (Unearned Income, Unearned Revenue)
To: "rshgeneral" <rshgeneral at yahoo.com>
Cc: gnucash-user at gnucash.org
Date: Tuesday, August 18, 2009, 5:38 AM

On Mon, Aug 17, 2009 at 6:57 PM, rshgeneral <rshgeneral at yahoo.com> wrote:




I'm a new gnucash  user helping someone switch from quickbooks.  I'm not sure

how gnucash handles prepaid services.  In accounting, I believe I would

credit (increase) a Prepaid Services account (a liability account) and debit

(increase) a checking account.  Using this process would produce the correct

accounting result, however, I just want to be sure that there is not already

a proper way to do this in gnucash using invoices.  I'm not even sure if you

are supposed to create an invoice for a prepaid service.  Whenever I try to

create an invoice, it allows me assign it to an income or liability account

(i like).  When I try to post the invoice, I'm restricted to posting it to

Accounts Receivable (i dont like).
If you have a contract that calls for payment on date x, with the services to be provided on date y, you could be posting the invoice to AR. For example, if you sign a contract that calls for payment by January 1, with the service to be provided on June 1, that becomes an AR transaction as of January 1.



The account would be receivable on date x (Debit AR, Credit Prepaid Services), the payment made on date y (Debit Cash, Credit AR), with the service actually provided on date z (Debit Prepaid Services, Credit Revenue).


John

-- 
John Edwards
"You can insure against the weather, but you can't insure against incompetence, can you?" - Phil Tufnell