July 28, 2010
When is revenue accrued – on provding service or on invoicing?
This is for the IRS Tax filing purpose
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Comments on When is revenue accrued – on provding service or on invoicing?
When the customer is invoiced for accrual basis taxpayers. When the money is received for cash basis taxpayers.
Invoicing. r
If you have elected the accrual basis of accounting (as opposed to cash basis) you would recognize revenue upon invoicing and recording the receivable. If you have a service business, you probably should use the cash basis of accounting and recognize revenue when it is collected. If you have substantial inventory that you also sell, you will have to use the accrual method.
Depends on the accounting method you choose – accrual or cash. In the accrual method, you recognize the revenue it when you invoice, in the cash method, you recognize it when you receive payment.
For example if you file a busines tax return you have to specify which method you use ( eg. Schedule K of the 1120 Tax form)