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Accounting & Bookkeeping & Small Business Forum
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jeremy4130
Joined: 29 Aug 2007
Posts: 5
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| Posted: Wed Sep 10, 2008 8:54 am Post subject: Pre payment as a liability. Which period to recongnize? |
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Hi all. Recently we generated a sales invoice so a customer could pre pay for an item not yet shipped.
I understand that when paid this is a cash event only and we should show a liability in the amount of the payment until we ship the product promised.
My question is, which period should the liability appear?
We invoiced in August. It is now September and we have not received payment on the invoice yet. Should this transaction show as a liabilty on August's balance sheet, because that's when we invoiced. Or should it not appear as a liability until we have received payment?
Thanks |
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dp1903
Joined: 23 Sep 2005
Posts: 112
Location: Wichita Falls, Texas
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| Posted: Wed Sep 10, 2008 1:29 pm Post subject: |
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You have no liability until you receive prepayment. The date you receive payment is the date you incur the liability. In QuickBooks Pro you can generate an invoice without impacting your accounting system. I think it is called a "pending" invoice [don't have my book with me at the university] but you have that capability in QuickBooks.
I have had to do the same thing. |
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jeremy4130
Joined: 29 Aug 2007
Posts: 5
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| Posted: Wed Sep 10, 2008 2:20 pm Post subject: |
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| OK, thanks! |
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