I have problems with my Profit & Loss Statements (cash basis), or I am doing something wrong from an accounting point of view.
I create my Sales Invoices for non inventory items with the issue date of the service delivery. And I always receive these payments in advance, sometimes with many months in advance. I always record payments for specific and numbered invoices.
When I create a Profit & Loss Statements (cash basis) for a given month, the revenue amounts are not in accordance with the cash flow of the receipts, that is, the Statement is showing the total sales value of Sales Invoice issued that month, even if payments were made in previous months. I believe that this should be the calculation used in the Accrual Basis method, however in the Cash Basis method these payment entries should not be shown. What can I be doing wrong?
Payments in advance for services not yet delivered should not really be shown as income until the service is delivered.
The advance payment should be put to a balance sheet account (Deposits received or Funds Received in Advance) until the service is delivered.
So Manager is reporting the income correctly when you enter a Sales Invoice with a future date and receipt against this invoice prior to the invoice date
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