by Jim
(Leesburg, FL USA)
Pastor traded in cell phone for a new one and received $240 credit to be applied to future cell phone bills. Should credit be booked as income or do not book and just have the credit applied to future cell phone bills which will reduce cell phone expense?
2Comments
Need help - Similar situation
JJane
My situation is similar but the credit is on our Lifeway account. We had a return that exceeded our purchases. Our financial sheet only shows the actual line items we have budgeted. Without the credit being shown, our monthly financial sheet doesn't balance. How would I show this credit until it's used?
Cash or Accrual Accounting Methods
VVickey
Most small churches use the cash accounting method.
With the cash accounting method, you do not record income until cash (or check) is actually received. See this page for the difference between the cash and accrual accounting methods. This article (on my small business accounting site) was written for "for-profit" organizations, but will give you an example in the difference between the 2 accounting methods.
If your church uses the cash accounting method then the credit would be not be recorded as income, but could be included in a footnote or noted in the entry for the reduced cell phone bills.
With the cash accounting method, you do not record income until cash (or check) is actually received. See this page for the difference between the cash and accrual accounting methods. This article (on my small business accounting site) was written for "for-profit" organizations, but will give you an example in the difference between the 2 accounting methods.
If your church uses the cash accounting method then the credit would be not be recorded as income, but could be included in a footnote or noted in the entry for the reduced cell phone bills.