Liabilities on Balance Sheet

[OidJoid]

Hi,

I have some confusion around two items on the liabilities section of a balance sheet; Under "Accounts Payable and Accrued Expenses" there is an item for "Customer Advances" of $207m. Under the next line is "Deferred Income" for $284m.

My question is why are these two not classed as the same to have one line with a total of $494m. What classifications could there be so that these two are recognized separately?

Liabilities:
Accounts Payable and Accrued Expenses - 4,611
Deferred Income - 284
Current Debt - 859
Total Current Liabilities - 5,754



Accounts Payable and Accrued Expenses Breakdown
Accounts Payable - 1,692
PP&E - 1,238
Salaries - 841
Income and Other Taxes - 402
Customer Advances - 207
Other - 231
Total - 4,611

 

[Blaby Loyal]

Looks like it would not be a UK accounting policy query but one where the '$' jurisdiction applies.

 

[Scalloway]

Do the accounts say under which accounting standards they have been compiled? Looking at the accounting standard should give an answer.

 

[EnhanceAccountancy]

Hi,
there is an item for "Customer Advances" of $207m. Under the next line is "Deferred Income" for $284m.

My question is why are these two not classed as the same to have one line with a total of $494m. What classifications could there be so that these two are recognized separately?

It is possible that the accountant has differentiated work that has been invoiced out with some of the income to be recognised in the future year (deferred income - e.g. sale of an annual software licence that straddles the company's financial year end) with money received from customers in advance, with the sales invoice not being raised until the future year when the work is actually performed for the customer (Customer Advances).

Possibly!

 

[numbersrule]

My understanding is that deferred income and customer advances are recorded as liabilities until the services or goods have been delivered. Recording them separately may be a convenient way of differentiating between a variety of income streams.