Construction accounts

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 March 2010 I HAVE A CONSTRUCTION COMPANY.I GET ADVANCES FROM MY CUSTOMERS.IS IT MY SALE AT THE END OF THE YEAR OR IT IS CONSIDERED AS MY CURRENT LIABILITY AS ADVANCE FROM CUSTOMER

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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06 March 2010 unless the Sales invoice raised there is no sale. It is current liablity, show as Advance from Customer

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Querist : Anonymous

Querist : Anonymous (Querist)

07 March 2010 then if in a year there is no sale deed only advances from customer then in that year how will i chart out my profit/loss for that period

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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07 March 2010 Dear KAMALIKA DEY DHARA

A Construction company need to follow the Accounting standard -7 for recognasie the sales revenue As per AS-7 percentage of completion method need to follw to arrive the Sales. If You are aleady done some work but not billed you need to calculate percentage of completion based your revenue as sales

But You only received the advance no work as started then such as case no sale in your P&L a/c. Only advance from customer need to show in liability side

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