Hi,
We invoiced a client just before the year end for a piece of work that would not be completed until the following financial year. I therefore want to be able to make a journal entry to transfer some of the income into “Deferred income” at the year end, transferring it back to be recognised in the following year as the work progresses, using the matching principle.
I can’t see a specific Deferred income account in the chart of nominals at the moment - do I need to create one, or would an existing account serve the purpose?
Hi, thanks, yes that might do - but would it necessarily be treated as a liability? I’m probably being dim, but I’m a bit hazy as to which of the assets and liabilities nominals are classed as which! Do the numbers indicate whether they are one or the other?
Kat
If you want that deferred income showing on your balance sheet as an asset, I think you’d need to create your own code. You can also use bank accounts for these types of movements, just create a bank account called “Deferred Income” and move the funds into there.
EDIT: I’m not an accountant so you may also wish to seek further professional advice on this.
Hi Glenn
Yes, I do want it on the balance sheet, as a liability until we can recognise it as income in the following year. What number ranges could I use for this?
Thanks
Kat
