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Old Deferred Revenue Balances

What is the best path for a deferred revenue balance that should have been taken as revenue during the course of the year? It was real revenue but the previous accountant didn't not record a journal entry each month to record the revenue.

Answers

Len Green
Title: Performance Improvement Consultant and E..
Company: Haygarth Consulting LLC
LinkedIn Profile
(Performance Improvement Consultant and ERP Strategist, Haygarth Consulting LLC) |

Anon,

Have you quantified the financial impact (on both P/L and B/S) of the actual practice v what should have happened, month by month and cumulatively? That may help drive decision making and disclosure approach to internal and external stakeholders.

Len

Topic Expert
Mark Sphar
Title: Chief Accounting Officer
Company: Veracity Payment Solutions
(Chief Accounting Officer, Veracity Payment Solutions) |

Agree w/ Len here. Be certain that the proposed entry is correct then present the changes to the financial statement readers. Good luck.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

If we're talking the same fiscal year, then you have two options. 1. make the appropriate entries into each period and then restate your financials or 2. make one entry that overs the missed periods in the current period.

Be sure to add a note as to why either course of action was done. While the YTD/year-end numbers will be blended, anyone coming later-on and does a review of period by period will see a transaction out of tune with the "norm" and start asking questions.

If it crosses fiscal years, then Len's approach is very important. If you are audited, talk with your auditors.

Anonymous
(Unemployed) |

Thanks guys. Very helpful information.

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