From the course: Introduction to Bookkeeping for Small Business Owners
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Customer prepayments
From the course: Introduction to Bookkeeping for Small Business Owners
Customer prepayments
- Are you an owner of a business that collects prepayments or retainers from clients for products or services to be delivered at a later date, such as construction, law, or manufacturing? Whether the client chooses to prepay for a better price or you require a down payment, there's a very specific way this collection of funds must be entered to avoid overstating income in the period. In this lesson, I'm going to demonstrate how to properly account for client deposits prior to services being provided and how to apply the prepayment to an invoice so you can accurately post the receipt of funds and capture the revenue when it's earned. According to accounting principles, you can't count money received as income until you've provided the products or services, and money received ahead of time is owed back to the client if they're not provided. This means the money you receive is a liability and not revenue. For this lesson…
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Contents
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(Locked)
Business versus personal funds3m 19s
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Tracking business transactions3m 21s
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Setting up loans and assets3m 10s
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Recording transfers2m 49s
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Depreciation and amortization4m 10s
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Using journal entries4m 42s
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Cash and accrual reporting3m 54s
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Customer prepayments3m 44s
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Defining class tracking2m 46s
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Defining job costing3m 31s
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Monitoring bartering services3m 9s
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