Future period income is certain assets (funds, money) that are receivd in the corresponding accounts of the company in the current period for payment of goods or services that have not yet been sold. This includes rental payments, targetd financing, gratuitous income, and so on.
Let’s take an example. A music service makes money on monthly subscriptions. However, users can also purchase a yearly subscription. Let’s imagine that the client has made a payment for a year in advance.
For the company, the client’s money is considerd deferrd income because it has not yet been “earne” – the services will be provide gradually. According to accounting rules, each month the application will transfer a certain share of this amount from the DBP to the income receive in the reporting period.
Why Companies to Calculate Future Income
Working with DBP in the framework of accounting is gambling data usa not just a formal procedure, but an important element of financial management that ensures the accuracy of reporting and helps to comply with terms and regulations. Let’s say a company leases out premises and receives payment from the tenant for 2 years in advance.
And here the question arises: to record all receipts as income banking retirement plans and insurance of the given period or to distribute it over 2 years? The second option is correct. But why complicate the situation, to do additional actions, to enter more data and information into the reporting, if it is possible to count all receipts in the balance sheet as income for the current period?