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I agree with Mr. Mir. Advanced payments from customers are liability following the revenue recognition principle. Revenue is recognized when earned regardless of cash collection. They shall be recognized as deferred revenue which is a liability account.
Realization Concept: According to this principle revenue is said to be realized when goods or services are sold to a customer. It emphasizes the fact that the mere receipt of an order for goods or services cannot be taken for the realization of revenue. So advanced payment received from a customer cannot be considered as revenue earned.
No.
A customer advances are usually stated as a current liability on the the balance sheet of the seller
Advance payment received from client is considered as liability as revenue should be recognized once it is earned.
No, It cannot be considered as Revenue ,suppose if we received the advance against supply of materials but in future we fail to supply the goods ,in this case we have to return the advance money to our customer.So the best practice most of the companies followed is to consider advance as liablity until we supplied all the goods.
no
No mind can not even be achieved revenue and remain registered boost to the customer's favor until the Revenue officially
I agree with answers provided NO
Advance payment received from the customer is in token of order / contract confirmation and to facilitate your working capital needs. It can not be recognized as a revenue immediately. It can be recognized as revenue upon approval of the progress/ partial billing by the customer. In case of one time delivery / service it can be recognized as a revenue in one go provided the bill rendered is approved by the customer.
It may be called as unearned revenue, deferred revenue or income received in advance and treated as a liability. Its treatment is just opposite to that given to earned revenue not billed , work-in-progress not billed etc.
NO
