Process Deferred Accounting

Process Deferred Accounting posts the month's share of income or expense that was invoiced in advance but is earned or consumed over time. A Rs 1,20,000 annual package invoiced in Shrawan is first credited to a Deferred Revenue liability instead of income; each month this process moves Rs 10,000 from Deferred Revenue to Rendering of Services, so the Profit and Loss shows the income in the month it was earned. The reverse applies to deferred expenses such as a year's insurance. It runs on its own each month from Accounts Settings, or you create one by hand for a date range to catch up. Submitted runs lock.

Monthly recognition = Invoice amount x days in the month / total days of the service period; Rs 1,20,000 / 12 = Rs 10,000

1. 01On the Item, tick Enable Deferred Revenue and set the deferred revenue account.
2. 02Submit the Sales Invoice with the service start and end dates on the row.
3. 03Go to Invoicing > Process Deferred Accounting > New.
4. 04Pick the company, type Income, and the Start Date and End Date of the month.
5. 05Submit. A Journal Entry as below posts for each invoice with a deferred row.
6. 06Check Deferred Revenue falls by the same amount each month until zero.

Runs automatically; create one manually under Accounts > Process Deferred Accounting to catch up. Submitted runs lock.

A Rs 1,20,000 annual package recognises Rs 10,000 per month.