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Where does revenue received in advance go on Balance Sheet?
Revenue received in advance shall be disclosed under the current liabilites in the balance sheet. When the goods will be shipped or services rendered, this will be eliminated.
It is a simple liabilities (deferred revenue)
Current Liabilities under the head Advances from customer
Current Liabilities-Advances under execution.
CURRENT LIABILITIES
liabilities - deferred revenue
It consider as Current Liabilities.
Prepayments are expenses paid in advance and the unexpired up is accounted as current assets in the Balance Sheet. Vice versa, revenues received in advance are payment received from customers for work not yet done or goods to be delivered at some future date. So, they are actually liabilities to the business as the business has still not earned the revenue because goods or services have still not been provided to the customers.
Accounting Entries:-
1)Advance Invoice Entry For Example sale value of goods is $1000 and cost of goods is $800 and10% advance received from Customer.
a)AR Dr…………………………………………………..$100
Advance Received from Customer Cr…………………………..$100
b)Cash / Bank A/c Dr………………………………$100
AR Cr……………………………………………………………………………..$100
2)Work done and goods delivered to the customer then Balance90% invoice Entry
a)Cost of Goods Sold Dr………………………...S800
Advance Received from Customer Dr........….$100
AR Dr…………………………………………….$900
Sale Cr……………………………………………………………………………$1000
Inventory Cr……......…………………………………………………………….…$800
b)Cash / Bank A/c Dr………………………………$900
AR Cr……………………………………………………………………………..$900
Current Liabilities.
Liabilities.As mostly of short term in nature under current liabilities.
