How to accrue for future month


M

Mark

I get a deposit for services I will do in the future. How can I have
the deposit go into income (in Quicken, not for taxes) for the future
month?

For example: I receive a deposit of $100 and deposit it in a savings
account on 1/1 for work in March. In March I will transfer the $100 to
my checking account to use for the job.

If I put an income catagory to this deposit on 1/1 and in March I
transfer the money from savings to checking and run reports, it will
appear that I earned that money on 1/1 instead of in March.
 
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D

danbrown

Mark said:
I get a deposit for services I will do in the future. How can I have
the deposit go into income (in Quicken, not for taxes) for the future
month?

For example: I receive a deposit of $100 and deposit it in a savings
account on 1/1 for work in March. In March I will transfer the $100 to
my checking account to use for the job.

If I put an income catagory to this deposit on 1/1 and in March I
transfer the money from savings to checking and run reports, it will
appear that I earned that money on 1/1 instead of in March.
There's really two separate issues here. I'll respond to your specific
question first.

Create an Asset account named, for example, "Pre-Paid work". When you
initially deposit the money into your savings (or whatever) account,
record the category as "Pre-Paid Work". Then, when you actually
perform the work, go into the "Prepaid" account, and reduce it's
balance by $100 with an item recorded to your Income account.

The 2nd issues is whether you are on a Cash basis for your taxes or an
accrual basis. Virtually all individuals and a great many businesses
operate on a Cash basis. But your initial question pre-supposes that
you're on an Accrual basis (income is recorded when the work is done
and expenses are recorded in accordanace with the work that they're
associated with).

Please clarify whether your accounting is on a cash or accrual basis.
Because if you're on a cash basis (which I somewhat suspect) the $100
is properly recorded in January ... 'cause that's when you got the cash
.... regardless of when you performed the work. Had you been paid in
January for December 2005 work, it would STILL be January income under
cash basis rules.

Also note that, for most people, accrual accounting is REALLY
complicated for most persons, and that you probably don't want to go
there if you don't have some really outstanding reasons ... and a
really good accountant (not just Quicken and this forum).

Dan
Former Wells Fargo Bank Audit VP
 

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