Unearned income

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2016 We charge an amount of Rs1000 per client for five years in advance under a scheme,

1 are we need to distribute this 1000 in five years as income?
2 Or we consider this 1000 as one time income?

Amol S Joglekar

Amol S Joglekar (Expert)
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20 September 2016 that depends upon what type of accounting system you are adopting....Cash system OR Mercantile
In cash system, you need to account for the income as it is received.
In mercantile system, you need to account for the same over the period of 5 years.

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2016 But this will go for 5 financial years and take a large financial working.
Every month an amount will added for nxt five years.

Amol S Joglekar

Amol S Joglekar (Expert)
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20 September 2016 so what? Computers are our door step....
and even if computers were not there, when the job is to be done as per the accounting system, no matter how lengthy it is.

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