Advance

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Anu Elizabeth Shaju (Querist)
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06 December 2012 how is the treatment of banquet advance received by a convention center?
Advance is collected from clients who book the hall. The advance remains with the company for more than 6 months in some cases?
Is this an income or a liability for the company?
please give the entries too....

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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07 December 2012 Advance will be treated as a liability until the service is rendered.

It will be transferred to income on the day the banquet hall is used.

Entries:

Cash A/c Dr
To Advance A/C

Advance A/c Dr
To Rental Income

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