UK AR unapplied and unidentified cash - deferred income

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
 

Fidget

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That sounds odd to me. Our AR team have unidentified cash every month and it goes into a suspense account until they find out where it needs to be applied. It's then moved to the relevant account it needs to go to.
 

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