I received payment for products sold and services provided in the previous year. When do I include the payment in income?
Allan Madan, CA
By default, businesses follow the accrual basis of accounting. This means that you report income in the period in which you provided the service / sold the goods. Therefore, in this example, you would report the income in December 2013. Similarly, if you receive a bill for an expense that you incurred in December 2012 and you paid it off in January 2014, you would report the expense in December 2013.
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The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CA.CPA.CGA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
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