Invoice & Bill Posting Date Issues Across Multiple Periods

[DaveC49]

Adrien,

With regard to the case where you are paid in advance for work not yet
completed a similar treatment could apply. If you were to issue an invoice
to the customer  you would post it when you raise it and you send it to the
customer. 

This would create an Asset: A/R entry debit entry for the amount with a
corresponding Liability:Prepaid Income account with the corresponding credit
entry.

When the customer pays the invoice then Asset:Bank is debited for the amount
and Asset:A/R is credited for the amount.

It is a Liability account since until you earn the income paid in advance,
you have an obligation to repay it if you do not perform the work in the
future.

When you complete an item of work, i.e. supply goods/services then
theLiability:PrepaidIncome is debited for an amount corresponding to the
work performed and a Revenue/Income account is credited for the same amount.
When you have completed the agreed work, the Liability:PrepaidIncome account
should be a zero balance. 

If the customer overpaid it is zeroed with a refund. Again whether it is a
current  or non-current liability is determined by whether you are going to
earn the income in the current period or some future period.

This allows you to separate the timing of the invoice, its payment and the
earning of the income in your account and recognize these separate events in
your accounts.

I hope this helps with a strategy for using the business features.

Cheers

David



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David Cousens
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