W
W15
Hi,
For accounts receivable, I’m trying to explain why AR posts unapplied or unidentified cash to both an asset account and to deferred income liability account.
The entries moving to deferred income are identified in AR as commission entries, I assume that on an accruals accounting basis - so cash is received and until known how it should be recognised it is placed in deferred income if unidentified, or if unapplied is in deferred income until the relevant service is rendered. At which point it would be applied, clear AR, and be recognised in the P&L?
Any assistance appreciated - I’m new to Cash application having a management accounts background.
many thanks
For accounts receivable, I’m trying to explain why AR posts unapplied or unidentified cash to both an asset account and to deferred income liability account.
The entries moving to deferred income are identified in AR as commission entries, I assume that on an accruals accounting basis - so cash is received and until known how it should be recognised it is placed in deferred income if unidentified, or if unapplied is in deferred income until the relevant service is rendered. At which point it would be applied, clear AR, and be recognised in the P&L?
Any assistance appreciated - I’m new to Cash application having a management accounts background.
many thanks
