Chris writes: > So if I pay $80 for a year of hosting on October 1, you would > materialize $20 in income on that year, and $60 the next year. Most of > the time this is not really material but there are cases when it could > be, since recognizing all income at the beginning of the contract can > inflate earnings when clients are gained and inflate losses when > customers cancelled.
The customer should credit cash $80 and debit prepaid expenses (an asset account) $80. He should then transfer $6.67 from prepaid expenses to expense each month. The hosting company should debit cash $80 and credit prepaid income (a liability account) $80. It should then transfer $6.67 from prepaid income to income each month. In practice such a small transaction is likely to be treated as completed immediately, but if the amount were $800,000 you'd want to do it right. -- John Hasler [email protected] Elmwood, WI USA ------------------------------------------------------------------------------ Try New Relic Now & We'll Send You this Cool Shirt New Relic is the only SaaS-based application performance monitoring service that delivers powerful full stack analytics. Optimize and monitor your browser, app, & servers with just a few lines of code. Try New Relic and get this awesome Nerd Life shirt! http://p.sf.net/sfu/newrelic_d2d_may _______________________________________________ Ledger-smb-devel mailing list [email protected] https://lists.sourceforge.net/lists/listinfo/ledger-smb-devel
