We canceled our conference this year and refunded registration fees for those who requested it. We issued vouchers for the rest. Are these funds considered a restricted asset, liability, or an expense for next year?

treasurer-avp · ‎October 03, 2020

I am using Quickbooks online and I need to close out my fiscal year, but I have an issue I can't figure out how to resolve. After cancelling our conference this year due to Covid19 we issued vouchers for next year's conference. My question is about how those funds should appear in my reports. Currently they are in the conference income account. Next year if we do not have an in-person conference, I will refund the amount of the vouchers. If we do have a conference, the funds will be applied to conference income. How do I show the amount of the vouchers - as income, as a liability, or as an expense? I have looked through all of the account types in QBO and can't find anything that corresponds to this situation. Can anyone make a suggestion?

Teri · ‎October 04, 2020

From what you have explained, you have customers who have paid you in advance and that you might later have to return those funds to them. Sounds like Deferred Revenue to me, also called Unearned Revenue. This is a Liability account because technically you owe this money back to these customers unless or until you perform the services they have paid for in advance. Assume you recorded debit to cash so need to credit new liability account 2xxx Deferred Revenue. Once you 'earn' the revenue, by doing the work as agreed, then you debit Deferred Revenue on Balance Sheet and credit (Earned) Revenue on Income Statement.

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Teri · ‎October 04, 2020

From what you have explained, you have customers who have paid you in advance and that you might later have to return those funds to them. Sounds like Deferred Revenue to me, also called Unearned Revenue. This is a Liability account because technically you owe this money back to these customers unless or until you perform the services they have paid for in advance. Assume you recorded debit to cash so need to credit new liability account 2xxx Deferred Revenue. Once you 'earn' the revenue, by doing the work as agreed, then you debit Deferred Revenue on Balance Sheet and credit (Earned) Revenue on Income Statement.

treasurer-avp · ‎October 04, 2020

Teri,

Thanks for your reply. I was looking at the Deferred revenue liability as one of my options, but I find that my QBOnline program does not give me that option. But it makes sense, so I created a new 2100 Current Liabilities account and chose the detail type of Other Current Liabilities and labeled it a Deferred Conference Revenue. Does that sound right?

Most of the answers I found had a similar problem, I didn't have the exact detail type choices, so I was unsure of which to choose.

Thanks for your help! I think this will work.

treasurer-avp · ‎October 04, 2020

Teri,

Thanks for your reply. I was looking at the Deferred revenue liability as one of my options, but I find that my QBOnline program does not give me that option. But it makes sense, so I created a new 2100 Current Liabilities account and chose the detail type of Other Current Liabilities and labeled it a Deferred Conference Revenue. Does that sound right?

Most of the answers I found had a similar problem, I didn't have the exact detail type choices, so I was unsure of which to choose.

Thanks for your help! I think this will work.

Teri · ‎October 04, 2020

@treasurer-avp

Glad to help, especially when users know enough to figure out the mechanics behind accounting entries. Deferred revenue is actually an 'advanced' accounting entry so good for you to be able to follow concept.

One thing to consider, is that this is "accrual-based" accounting. So if you are doing taxes on "cash-basis," this cash received will be counted as revenue and you pay taxes on it in the year cash received vs. earned.

treasurer-avp · ‎October 04, 2020

Teri,

Yes we do accrual based accounting. I forgot to mention that. Thanks so much for your help.

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We canceled our conference this year and refunded registration fees for those who requested it. We issued vouchers for the rest. Are these funds considered a restricted asset, liability, or an expense for next year?