Accounting treatment

Greetings Mr. Mishra,

It all depends upon the nature of these advances.

If the advances received are non-refundable, they are to be booked as revenue i.e. sales are to be booked as per A.S.9. Otherwise they are to be reflected as an obligation in the year end financial statements. A likewise treatment is to be made for purchases.

As the client is paying sales related commission on progessive basis, revenue is also to be recognised on corresponding progressions for complying the matching principle.

Kind Regards.