Re: [SL] Handling prepayments

[Michael H. <mh...@it...>]

All the responses make sense and are greatly appreciated!  (And I  
actually have taken some accounting classes, but they were years  
ago.  :)
    What I am trying to figure out is how the bank account balance in  
the GL can reflect the funds that are posted to the liability account 
(s)...?  E.g. somebody purchases a prepaid block of time for $10k,  
that money certainly hits the bank account in the real world but if  
it's posted to the liability account in SL, won't our bank balance in  
SL fail to show it?


Thanks!

Michael


On Feb 14, 2007, at 3:02 AM, Roy Nicholl wrote:

> Sorry about the confusion Eberhard,   I was merely referring to the
> mechanics of recording prepayments and the similarity to recording
> collected tax - and action which Michael may already be familiar ...
> I did not imply, not intend to imply, that you were paying tax on the
> prepayment ... just that the patter was similar.
>
>
> On 14-Feb-2007, at 00:20, Dr Eberhard Lisse wrote:
>
>> 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?  :)
>>
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