Accounting for Deferred Income and Payments


J

Joseph N.

There are several instances of income and expenses that I should be
receiving or spending in 2004, but they will occur early in 2005
instead. Nevertheless, I want to count them in my analysis of income
and expenses for 2004. What is the best way to do that?
 
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J

Jim M.

Assuming you are doing this for personal reasons and NOT tax
reasons/considerations, record them with a 2004 transaction date. I will be
interested in seeing other responses.
Jim M.
 
T

TomYoung

One way to do this without mis-stating other accounts (e.g., bank
account) and to keep these "timing" transactions in one place for sake
of clarity is to set up a special account to record them in, with a
2004 date. You might call this account "Accruals" or something
similar. If you expect the account will be net "positive" after you
make your entries (i.e., an asset) then you might set it up as an asset
account, while if you expect it to be "negative" (i.e., a liability)
you might set it up as a liability account. It really doesn't matter.

For sake of illustration, say you expect to receive a straight
commission check in 2005 of $1,000 for a sale you made in 2004. You
could record this $1,000 as an "increase" in your Accruals account (an
asset account for this illustration) with a 2004 date, with a category
of "Commission Income." When you received the $1,000 check in 2005
you'd deposit it in your bank account with an offset ("transfer" in
Quicken-speak) to the Accruals account. That would bring the Accruals
account down to $0. The income associated with this transaction would
be recorded in 2004 and the cash would be recorded in 2005.
 
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