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Chapter 17. Recording Liabilities > Accounting for Deposits or Retainers

Accounting for Deposits or Retainers

Depending on which type your company is, you might receive advances, deposits, or retainers from your customers or clients. Although this money has been paid to you, it is for future services and has not yet been earned. Therefore, instead of recording the money as income, the payments you receive should be recorded as liabilities. After you perform the services and earn the money, you transfer the liability to an income account.

Account for Deposits or Retainers

See Also

See “Receiving Advances and Down Payments” on page 91 for information on the proper method for recording the receipt of a deposit or retainer.



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