We are developing a product and are pre-selling it on the website. Normally, when we have inventory, the sales would be counted as regular income, and the gross profit would be income minus COGS. However, there are no COGS, yet. I am just accumulating income from pre-sales.
I've heard the income is then considered a liability until the sales are fulfilled, however I don't know how to account for this, say, in my accounting software? What accounts would be affected on the balance sheet before the sales are made?
I've heard the income is then considered a liability until the sales are fulfilled, however I don't know how to account for this, say, in my accounting software? What accounts would be affected on the balance sheet before the sales are made?
