I do the books for a driving instructor and he has recently started doing 5 lessons for £x. I understand that at the end of the financial year I will have to defer income for lessons not already undertaken but should I be doing this on a monthly basis. ie putting the income down as deferred then allocating it to current income once lesson taken?
it's best to do it that way so that the management accounts are always current for the client.
The legal commitment is only however to ensure that the period end financial statements correctly reflect the true status of revenue (see IAS18).
It sounds from the question as though you have the regulatory requirement covered and the remainder is good practice but not always completely possible where clients only want their books updating annually before sending on to the accountant or quarterly before VAT returns.
HTH,
Shaun.
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Shaun
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