Re: [SL] Handling prepayments

[Dr E. L. <el...@li...>]

Michael,

The money is in the bank. What we are discussing here, is how you
*account* for it.

It first is a liability, but still in the bank account. Once you "earn"
it by "paying" an invoice, it still is in the bank account, but it
becomes revenue.

I would perhaps look at some reading material about accounting...

Roy,

I do not understand your contribution. We are not discussing expenses
here, but revenue. And, you can not pay tax on pre-payment, because you
haven't provided a service, sold anything, i.e. you did not generate an
invoice. But then maybe I should read more ont he subject :-)-O

greetings, el

on 2/14/07 3:27 AM Roy Nicholl said the following:
> Prepaid expenses are treated pretty much the same as the sales tax/ 
> VAT you collect on behalf of the government.   The money is paid into  
> your operating account, but you also credit the Tax account (a  
> liability) because the money does not belong to you.  When you remit  
> the tax to the government, you pay it out of the tax account.
> 
> 
> On 13-Feb-2007, at 20:32, Michael Hasse wrote:
> 
>> Mkay, that makes sense, but if there's a GL debiting the bank
>> account, how does the bank account get credited again?  (Maybe I
>> should just try it and see what happens!  Nothing like the hands-on
>> approach, eh?  :)